US FED / TREASURY LIQUIDITY — WEEKLY MEMO
Week Ending 2026-05-15
Strong net liquidity injection: TGA drawdown and reserve build outweighed rate-path pressure.
URLI Score
+31.25
Mildly supportive
Net Liquidity
+$70.7B
Meaningful injection
Bank Reserves
+$65.9B
Reserve build
TGA Change
-$55.3B
Treasury cash injection
RRP Change
+$3.7B
Cash parked at the Fed
Fed Regime
Hold but cut path fading
3.50%-3.75%
Treasury Outlook
TGA rebuild expected
Forward liquidity risk
Market Bias
RISK ON
Liquidity supportive; yields still matter
Executive Conclusion
Supportive
- Net liquidity rose +$70.7B, driven by a -$55.3B TGA drawdown.
- Bank reserves rose +$65.9B, a meaningful reserve build.
- Funding markets stayed calm with no stress shock.
Restrictive
- Fed rate-cut path was fading, keeping policy restrictive.
- Treasury guidance pointed to a forward TGA rebuild.
- USD and yield pressure capped risk appetite.
Main Warning
- TGA rebuild risk was the main forward drain; the strong week was driven by flows that could reverse.
POSITIVE URLI +31.25 — Mildly supportive.
What Changed This Week
| Item | Previous | Latest | Change | Impact |
|---|---|---|---|---|
| Fed total assets | $6,709.5B | $6,728.5B | +$19.0B (+0.3%) | POSITIVE |
| Bank reserves | $3,051.5B | $3,117.4B | +$65.9B (+2.2%) | POSITIVE |
| TGA | $862.8B | $807.4B | -$55.3B (-6.4%) | POSITIVE |
| RRP | $322.7B | $326.3B | +$3.7B (+1.1%) | NEGATIVE |
| Fed rate path | — | hold but cut path fading | 3.50%-3.75% | NEGATIVE |
| Dollar / yields | — | USD or yields up | NEGATIVE |
Previous week: 2026-05-08 (H.4.1 weekly levels).
Net Liquidity Calculation
Net Liquidity Change = Fed Balance Sheet Change - TGA Change - RRP Change
| Component | Weekly Change | Effect | Notes |
|---|---|---|---|
| Fed balance sheet | +$19.0B | POSITIVE | Balance-sheet growth adds liquidity. |
| TGA | -$55.3B | POSITIVE | TGA up pulls cash into Treasury; TGA down injects it. |
| RRP | +$3.7B | NEGATIVE | RRP up parks cash at the Fed; RRP down releases it. |
| Net liquidity | +$70.7B | MEANINGFUL INJECTION | Sum of the three flows above. |
URLI — US Risk Liquidity Index
URLI = 0.35 x Net Liquidity + 0.20 x Bank Reserves + 0.15 x Fed Rate Path + 0.10 x Treasury Outlook + 0.10 x Funding Stress + 0.10 x Dollar/Yield Pressure
| Component | Weight | Score | Contribution |
|---|---|---|---|
| Net Liquidity | 35% | +75 | +26.25 |
| Bank Reserves | 20% | +70 | +14.00 |
| Fed Rate Path | 15% | -20 | -3.00 |
| Treasury Outlook | 10% | -50 | -5.00 |
| Funding Stress | 10% | +20 | +2.00 |
| Dollar / Yield Pressure | 10% | -30 | -3.00 |
| Metric | Value |
|---|---|
| Weekly URLI | +31.25 |
| 4-week moving average | N/A — insufficient history |
| 13-week moving average | N/A — insufficient history |
Observed URLI history
| Week | URLI | Net Liquidity | Reserves | TGA | RRP | Read |
|---|---|---|---|---|---|---|
| 2026-05-15 | +31.25 | +$70.7B | +$65.9B | -$55.3B | +$3.7B | MILDLY SUPPORTIVE |
| 2026-05-22 | -23.50 | -$5.7B | -$10.7B | -$25.4B | +$16.3B | NEGATIVE |
| 2026-05-29 | -41.50 | -$28.2B | -$39.7B | +$60.7B | -$41.7B | NEGATIVE |
| 2026-06-05 | -33.50 | -$20.9B | -$21.4B | +$3.1B | +$24.9B | NEGATIVE |
| 2026-06-12 | +29.75 | +$67.0B | +$65.8B | -$44.6B | -$8.5B | POSITIVE |
| 2026-06-19 | -66.50 | -$162.7B | -$175.1B | +$155.4B | +$18.3B | NEGATIVE |
Observed URLI history covers completed weekly runs. Historical percentile ranking uses URLI-Core: the four data-derived components (Net Liquidity, Bank Reserves, Funding Stress, Dollar/Yield Pressure), representing 75% of URLI weight, ranked against frozen weekly FRED history since 2020 and shown in the distribution gauge above. The two policy-judgment components and 13-week live average are outside this percentile lens.
Forward View
Projected URLI — 2026-05-22 estimate
| Item | Estimate | Bias |
|---|---|---|
| Projected URLI point | TBD | LEANING LIQUIDITY DRAIN |
| Backtested URLI range | -18 to -32 | RANGE |
Model track record: last 5 completed projections hit 4/5; mean absolute URLI error 28.40.
Assumptions
- TGA rebuild and Treasury settlement pressure expected to offset SOMA support.
- RRP assumed roughly stable pending observed usage.
Projection is a model-derived scenario with a measured historical error band, not an observed URLI value. It is replaced by actual H.4.1 / TGA / RRP data in the next weekly run.
Alerts & Warnings
| Alert | Status | Notes |
|---|---|---|
| Major injection / drain | NEUTRAL | Net liquidity +70.7B; no breach of the +/-$100B threshold. |
| Reserve shock | POSITIVE | Bank reserves +65.9B; inside the +/-$75B shock band. |
| TGA rebuild risk | WATCH | Treasury guidance pointed to a TGA rebuild toward the $900B end-June cash-balance assumption, a forward liquidity drain risk. |
| RRP shock | NEUTRAL | RRP +3.7B; below the $50B shock threshold. |
| Fed rate path | NEGATIVE | April 29, 2026 FOMC held the target range at 3.50%-3.75%. Rate-cut expectations were fading but hike risk was not yet the base case. |
| Funding stress | POSITIVE | SOFR traded calmly inside the policy corridor; no emergency facility usage appeared in H.4.1. |
| Historical significance | POSITIVE | URLI-Core (4 data components, 75% weight) = +39.25 ranks in the 77th percentile of weeks since 2020 (N=337). |
Market Transmission
| Asset | Bias | Reason |
|---|---|---|
| SPX / QQQ | SUPPORTED | Mildly supportive; index-level liquidity supports multiple expansion. |
| Small caps / breadth | NEUTRAL | Rate-sensitive; needs reserve support and lower yields. |
| BTC / ETH | SUPPORTED | Crypto tracks net liquidity; this week's flow was +$70.7B. |
| High-beta alts | WATCH | Need both a positive URLI trend and BTC leadership to outperform. |
POSITIVE Liquidity supportive; yields still matter.
Bull / Base / Bear Scenarios
| Scenario | Liquidity Setup | Market Impact | Confirms / Invalidates |
|---|---|---|---|
| BULL | TGA drawdown resumes; SOMA support continues; yields cool. | Risk assets bid. | Confirms: net liquidity > +$50B. Invalidates: TGA rebuild accelerates. |
| BASE | Flat net liquidity; Treasury supply offsets SOMA. | Choppy, range-bound. | Confirms: stable reserves, calm SOFR. Invalidates: auction stress or USD breakout. |
| BEAR | TGA rebuild + bill supply + higher yields. | Risk-off. | Confirms: TGA spikes with rising yields. Invalidates: TGA drawdown and falling yields. |
Sources & Data Definitions
| Field | Source | Type |
|---|---|---|
| Balance sheet / reserves / RRP / TGA | Federal Reserve H.4.1 | Official |
| Verification series | FRED WALCL / WRBWFRBL / WDTGAL / WLRRAL | Official |
| Fed policy / rate path | FOMC statement & minutes | Official |
| Treasury outlook | Quarterly Refunding Statement | Official |
| Funding stress score | FRED SOFR / IORB — 5-business-day avg SOFR−IORB spread (bps) | Official |
| Dollar/yield score | FRED DTWEXBGS / DGS10 — weekly Δ broad dollar (%) × Δ 10Y yield (bps) | Official |
| Metric | Definition |
|---|---|
| Fed balance sheet | H.4.1 Total assets, weekly point-in-time level. |
| Bank reserves | H.4.1 Table 5 'Other deposits held by depository institutions' (weekly reserve balances). |
| TGA | U.S. Treasury, General Account. TGA down is liquidity positive. |
| RRP | Reverse repurchase agreements. RRP up parks cash at the Fed. |
| Basis | Latest week 2026-05-15; previous week 2026-05-08; H.4.1 levels in $M, displayed in $B. |