US FED / TREASURY LIQUIDITY — WEEKLY MEMO
Week Ending 2026-07-03
Plumbing stays supportive: a further -$94.5B TGA drawdown pushed bank reserves up +$122.6B, even as the dollar/yield backdrop firmed on a hawkish-leaning yield move.
URLI Score
+36.75
Mildly supportive
Net Liquidity
+$81.5B
Meaningful injection
Bank Reserves
+$122.6B
Reserve build
TGA Change
-$94.5B
Cash injection
RRP Change
+$1.9B
Cash parked
Fed Regime
Hold
3.50%-3.75%
Treasury Outlook
Neutral
Supportive
Market Bias
RISK ON
Supportive
Executive Conclusion
Supportive
- Net liquidity rose an estimated +$81.5B as the $94.5B TGA drawdown outweighed the small -$11.1B Fed asset dip and +$1.9B RRP uptick.
- Bank reserves jumped +$122.6B to $3.08T, the largest weekly increase in recent months; reserves remain ample.
- Funding markets stayed calm through quarter-end and the holiday-shortened week: SOFR-IORB averaged -0.6 bps with no stress signals.
- HY credit spreads tightened -8 bps (2.83% to 2.75%) and equities/BTC rallied (S&P +1.8%, Nasdaq +2.1%, BTC +4.2%) after a weak June jobs report reduced hike-risk pricing.
- The calendar model projects a further ~$217B TGA drawdown next week -- another potential liquidity injection if realized.
Restrictive
- The 10-year yield rose +10 bps to 4.48%, keeping the Dollar/Yield Pressure score at -30 despite the softer jobs data.
- TGA at $807.4B is now below Treasury's own ~$900B end-June assumption; a large rebuild toward the ~$1T late-July target still looms and would drain reserves when it comes.
- The June SEP hawkish path (median one hike by year-end, PCE 3.6%) is technically unchanged even though the weak +57k payrolls print is the first real data challenge to it.
- Gold's rally (+2.4% on the week) reflects real hedging demand around the weak jobs data and looming Fed uncertainty, not a pure liquidity signal.
Main Warning
- Plumbing and risk sentiment both turned more supportive this week, but the moves are running on a single soft jobs print (+57k) against a Fed dot plot that has not moved. Watch whether the July 14 CPI print and the size of any Treasury-bill rebuild toward the ~$1T TGA target confirm or reverse this week's reprieve before the July 28-29 FOMC.
POSITIVE URLI +36.75 — Mildly supportive.
WEEKLY LIQUIDITY MAP
Liquidity Waterline
Every node is a water tank: the solid fill is this week's level, the dashed line is last week, and the faint line is the 3-month average. Funding sources feed net liquidity, which flows through the risk gate to crypto markets. Fill colour marks liquidity effect, not raw level.
Funding Sources
TGA-$94.5BADD
Fed B/S-$11.1BWATCH
Reserves+$122.6BADD
RRP+$1.9BNEUTRAL
Net Liquidity
US Net Cash+81.5BADD
Risk Gate
Risk AssetsURLI +36.8ADD
Crypto Markets
Crypto Beta$2.28TADD
Meme Beta$28BADD
AddDrainWatchNeutralLast week3-month avg
Liquidity tanks update weekly (Fed H.4.1 / FRED · as of Jul 3, 2026). Crypto & meme market cap and read use the weekly report snapshot (CoinGecko · as of Jul 4, 2026). Homepage and latest weekly memo use the same Waterline snapshot. AI-readable: JSON · Markdown.
What Changed This Week
| Item | Previous | Latest | Change | Impact |
|---|---|---|---|---|
| Fed total assets | $6,735.6B | $6,724.6B | -$11.1B (-0.2%) | NEGATIVE |
| Bank reserves | $2,954.5B | $3,077.0B | +$122.6B (+4.1%) | POSITIVE |
| TGA | $901.8B | $807.4B | -$94.5B (-10.5%) | POSITIVE |
| RRP | $336.5B | $338.4B | +$1.9B (+0.6%) | NEGATIVE |
| Fed rate path | — | hold with hike risk | 3.50%-3.75% | NEGATIVE |
| Dollar / yields | — | dollar firm-ish (stale print, +0.4%); yields up (+10 bps) | Broad USD 120.89 (FRED/H.10 DTWEXBGS, 2026-06-26 — latest available; H.10 has not yet posted a print through the July 3 week-ending date); prior 120.40 (2026-06-18) | NEGATIVE |
Previous week: 2026-06-26 (H.4.1 weekly levels).
Fed Balance Sheet Detail
| Indicator | Latest | Weekly Change | Read |
|---|---|---|---|
| Fed total assets | $6,724.6B | -$11.1B (-0.2%) | NEGATIVE |
| Securities held outright | $6,443.0B | -$9.1B (-0.1%) | NEGATIVE |
| Treasury securities | $4,492.2B | +$4.1B (+0.1%) | POSITIVE |
| Bank reserves | $3,077.0B | +$122.6B (+4.1%) | POSITIVE |
| Discount window | $7.8B | -$0.1B (-1.5%) | POSITIVE |
H.4.1 levels in millions of dollars for Wednesday July 1, 2026 (release dated July 2, 2026). WALCL (total assets), WRBWFRBL (bank reserves), WDTGAL (TGA), and WLRRAL (RRP) verified against FRED (FRED date: 2026-07-01). Securities held outright (WSHOSHO), Treasury securities (TREAST), MBS (WSHOMCB), and primary credit/discount window (WLCFLPCL) also cross-verified against FRED for 2026-07-01, all exact matches to the official H.4.1 release page. Reserve Bank credit and the Main Street Facilities 2020 LLC residual ($628M, +$2M) read from the official H.4.1 release page Table 1/5 (no distinct keyless FRED series identified for reserve bank credit this run).
Net Liquidity Calculation
Net Liquidity Change = Fed Balance Sheet Change - TGA Change - RRP Change
| Component | Weekly Change | Effect | Notes |
|---|---|---|---|
| Fed balance sheet | -$11.1B | NEGATIVE | Balance-sheet growth adds liquidity. |
| TGA | -$94.5B | POSITIVE | TGA up pulls cash into Treasury; TGA down injects it. |
| RRP | +$1.9B | NEGATIVE | RRP up parks cash at the Fed; RRP down releases it. |
| Net liquidity | +$81.5B | 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% | +100 | +20.00 |
| Fed Rate Path | 15% | -50 | -7.50 |
| Treasury Outlook | 10% | +0 | +0.00 |
| Funding Stress | 10% | +10 | +1.00 |
| Dollar / Yield Pressure | 10% | -30 | -3.00 |
| Metric | Value |
|---|---|
| Weekly URLI | +36.75 |
| 4-week moving average | +6.44 |
| 13-week moving average | -1.33 |
Observed URLI history
| Week | URLI | Net Liquidity | Reserves | TGA | RRP | Read |
|---|---|---|---|---|---|---|
| 2026-07-03 | +36.75 | +$81.5B | +$122.6B | -$94.5B | +$1.9B | MILDLY SUPPORTIVE |
| 2026-06-26 | +25.75 | +$53.0B | +$18.1B | -$54.7B | +$0.9B | POSITIVE |
| 2026-06-19 | -66.50 | -$162.7B | -$175.1B | +$155.4B | +$18.3B | NEGATIVE |
| 2026-06-12 | +29.75 | +$67.0B | +$65.8B | -$44.6B | -$8.5B | POSITIVE |
| 2026-06-05 | -33.50 | -$20.9B | -$21.4B | +$3.1B | +$24.9B | NEGATIVE |
Show 50 earlier entries
| Week | URLI | Net Liquidity | Reserves | TGA | RRP | Read |
|---|---|---|---|---|---|---|
| 2026-05-29 | -41.50 | -$28.2B | -$39.7B | +$60.7B | -$41.7B | NEGATIVE |
| 2026-05-22 | -23.50 | -$5.7B | -$10.7B | -$25.4B | +$16.3B | NEGATIVE |
| 2026-05-15 | +31.25 | +$70.7B | +$65.9B | -$55.3B | +$3.7B | POSITIVE |
| 2026-05-08 | +58.50 | +$134.9B | +$132.3B | -$125.3B | -$0.0B | POSITIVE |
| 2026-05-01 | -2.00 | +$14.0B | +$4.6B | -$19.1B | -$2.4B | NEUTRAL |
| 2026-04-24 | -39.25 | -$66.3B | -$65.6B | +$82.7B | -$14.7B | NEGATIVE |
| 2026-04-17 | -51.50 | -$210.5B | -$203.3B | +$227.4B | -$5.0B | NEGATIVE |
| 2026-04-10 | +58.50 | +$119.7B | +$119.1B | -$106.5B | +$5.3B | POSITIVE |
| 2026-04-03 | +21.00 | +$46.6B | +$28.4B | -$33.9B | +$5.5B | POSITIVE |
| 2026-03-27 | +29.00 | +$36.9B | +$37.3B | -$38.4B | +$2.8B | POSITIVE |
| 2026-03-20 | -42.25 | -$66.3B | -$74.3B | +$70.0B | +$5.9B | NEGATIVE |
| 2026-03-13 | +38.25 | +$52.7B | +$59.4B | -$41.2B | +$6.0B | POSITIVE |
| 2026-03-06 | -5.00 | +$16.8B | +$9.3B | +$8.0B | -$9.7B | NEUTRAL |
| 2026-02-27 | +41.25 | +$50.4B | +$44.5B | -$49.9B | -$0.1B | POSITIVE |
| 2026-02-20 | +0.50 | +$4.0B | +$1.5B | -$21.7B | +$8.7B | NEUTRAL |
| 2026-02-13 | +12.00 | +$19.9B | +$21.0B | +$2.8B | -$6.2B | POSITIVE |
| 2026-02-06 | +38.25 | +$63.6B | +$54.6B | -$45.0B | -$0.3B | POSITIVE |
| 2026-01-30 | -36.75 | -$82.3B | -$73.6B | +$81.5B | +$3.8B | NEGATIVE |
| 2026-01-23 | -45.25 | -$96.9B | -$105.2B | +$94.1B | +$5.6B | NEGATIVE |
| 2026-01-16 | +29.00 | +$25.2B | +$38.8B | -$6.5B | -$10.5B | POSITIVE |
| 2026-01-09 | +53.00 | +$156.2B | +$169.6B | -$89.3B | -$133.9B | POSITIVE |
| 2026-01-02 | -61.00 | -$152.6B | -$127.1B | +$71.3B | +$140.7B | NEGATIVE |
| 2025-12-26 | +43.75 | +$95.0B | +$46.9B | -$59.9B | -$10.7B | POSITIVE |
| 2025-12-19 | -30.00 | -$38.7B | -$40.1B | +$55.6B | +$0.7B | NEGATIVE |
| 2025-12-12 | +56.00 | +$107.2B | +$95.6B | -$102.7B | -$1.0B | POSITIVE |
| 2025-12-05 | -26.00 | -$25.7B | -$19.8B | +$8.8B | +$0.2B | NEGATIVE |
| 2025-11-28 | -5.50 | -$6.9B | -$19.5B | -$1.2B | +$5.1B | NEUTRAL |
| 2025-11-21 | +26.00 | +$32.2B | +$34.2B | -$42.3B | -$15.1B | POSITIVE |
| 2025-11-14 | +31.00 | +$37.4B | +$31.4B | +$0.4B | -$30.1B | POSITIVE |
| 2025-11-07 | +7.00 | +$21.8B | +$24.0B | -$41.2B | +$5.1B | NEUTRAL |
| 2025-10-31 | -55.25 | -$94.3B | -$101.7B | +$78.8B | +$13.0B | NEGATIVE |
| 2025-10-24 | -42.25 | -$66.6B | -$58.6B | +$53.1B | +$6.5B | NEGATIVE |
| 2025-10-17 | -24.50 | -$44.3B | -$45.7B | +$57.9B | -$7.9B | NEGATIVE |
| 2025-10-10 | +38.25 | +$58.0B | +$54.3B | -$25.3B | -$28.9B | POSITIVE |
| 2025-10-03 | -34.25 | -$58.2B | -$20.1B | +$61.4B | -$24.5B | NEGATIVE |
| 2025-09-26 | -12.00 | +$11.2B | -$20.7B | -$49.2B | +$37.7B | NEGATIVE |
| 2025-09-19 | -51.50 | -$125.5B | -$130.6B | +$139.6B | -$11.4B | NEGATIVE |
| 2025-09-12 | -2.50 | -$16.0B | -$17.0B | +$5.6B | +$14.2B | NEUTRAL |
| 2025-09-05 | -26.00 | -$43.0B | -$48.9B | +$66.1B | -$24.4B | NEGATIVE |
| 2025-08-29 | -44.25 | -$78.9B | -$80.8B | +$69.7B | -$5.9B | NEGATIVE |
| 2025-08-22 | -29.00 | -$32.7B | -$30.7B | +$10.6B | -$3.1B | NEGATIVE |
| 2025-08-15 | +2.00 | -$4.7B | -$2.0B | +$51.2B | -$43.7B | NEUTRAL |
| 2025-08-08 | +35.00 | +$33.2B | +$30.7B | +$44.9B | -$79.8B | POSITIVE |
| 2025-08-01 | -41.25 | -$59.7B | -$58.7B | +$85.9B | -$41.3B | NEGATIVE |
| 2025-07-25 | -1.50 | -$15.3B | -$16.7B | +$21.5B | -$7.7B | NEUTRAL |
| 2025-07-18 | +23.00 | +$31.4B | +$33.0B | +$1.0B | -$35.1B | POSITIVE |
| 2025-07-11 | +48.25 | +$84.9B | +$85.5B | -$61.2B | -$21.4B | POSITIVE |
| 2025-07-04 | -42.75 | -$87.3B | -$90.8B | +$37.7B | +$47.1B | NEGATIVE |
| 2025-06-27 | +24.50 | +$23.6B | +$24.3B | -$49.3B | +$6.9B | POSITIVE |
| 2025-06-20 | -53.00 | -$104.1B | -$106.7B | +$106.8B | +$1.1B | 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 — 2026-07-10 estimate
| Item | Estimate | Bias |
|---|---|---|
| Projected URLI point | +45.50 | BULLISH LIQUIDITY BACKDROP |
| Backtested URLI range | +45.50 to +45.50 | SATURATED |
| Uncertainty band: net liquidity | $103.9B to $330.3B | WATCH |
| Range note | URLI band saturated; uncertainty is better read as net liquidity $103.9B to $330.3B. | WATCH |
| Confidence | Model backtest cleared: RMSE $113.2B vs naive $142.9B; hit rate 58.0%. Manual review required for calendar-risk flags. | WATCH |
| Backtest gate | RMSE improvement 20.81% | MODEL |
| Component | Projected Change | Method |
|---|---|---|
| Fed balance sheet | +3.3B | Trailing 4-week mean |
| TGA | -217.0B | Treasury settlements minus maturities |
| RRP | +3.2B | Trailing 4-week mean |
| Net liquidity | +217.1B | Fed BS - TGA - RRP |
Model track record: last 7 completed projections hit 4/7; mean absolute URLI error 23.79.
Assumptions
- TGA projected from Treasury settlements ($313.0B) minus maturities ($530.0B) for the Thursday-Wednesday week.
- Fed balance sheet change carries forward the trailing 4-week mean: +3.3B.
- RRP change carries forward the trailing 4-week mean: +3.2B.
- Projected bank reserves use net liquidity as a reserve-identity approximation; actual reserves can differ.
- Fed rate path, Treasury outlook, funding stress, and dollar/yield scores are held at the latest actual week.
- Scheduled FOMC risk may fall near this projection window; verify the official Fed calendar manually.
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.
Next-week liquidity calendar
| Date | Event | Expected Size | Liquidity Effect | Bias |
|---|---|---|---|---|
| 2026-07-07 | 52-week Treasury bill auction and 3-year Note auction | 52-week bill: regular quarterly reopening; 3-year Note: regular monthly reopening (settlement July 9 and July 15 respectively) | Coupon/bill settlement drains cash to Treasury; net effect depends on par of maturing securities vs. new issuance | NEGATIVE |
| 2026-07-08 | 10-year Treasury Note auction | Regular monthly reopening; settlement July 15 | Coupon settlement drains cash to Treasury ahead of mid-July | NEGATIVE |
| 2026-07-09 | 30-year Treasury Bond auction | Regular monthly reopening; settlement July 15 | Coupon settlement drains cash to Treasury ahead of mid-July | NEGATIVE |
| 2026-07-14 | June CPI release | N/A | No direct plumbing effect; a hot print would reinforce Fed hike risk and pressure the Fed Rate Path score ahead of the July 28-29 FOMC | WATCH |
| Week of 2026-07-06 | Projected TGA drawdown continues: settlements ($313B) vs. maturities ($530B) | Net TGA drawdown of ~$217B projected by the calendar-mechanical model | If realized, injects further reserves into the banking system -- bullish URLI signal; drives the projected URLI to +48.5 (band-saturated) | POSITIVE |
| 2026-07-28 | Next FOMC meeting begins (July 28-29, 2026) | N/A | Rate decision; the July 2 weak payrolls print has begun repricing hike risk lower, but the June SEP dot plot still shows a median hike by year-end | WATCH |
Alerts & Warnings
| Alert | Status | Notes |
|---|---|---|
| Major injection / drain | NEUTRAL | Net liquidity +81.5B; no breach of the +/-$100B threshold. |
| Reserve shock | POSITIVE | Bank reserves +122.6B, above the +$75B threshold. |
| TGA rebuild risk | WATCH | TGA fell a further -$94.5B on the week to $807.4B as of July 1, dropping below Treasury's ~$900B end-June cash assumption from the May refunding statement (SB0489) rather than rebuilding toward it. Treasury's own guidance still points to a ~$1T peak (+/- $50B) in late July, so a substantial rebuild via bill issuance remains likely in the coming weeks; the near-term path is genuinely two-sided (further drawdown vs. issuance-driven rebuild), so the outlook stays neutral rather than one-directional. |
| RRP shock | NEUTRAL | RRP +1.9B; below the $50B shock threshold. |
| Fed rate path | NEGATIVE | No FOMC meeting this week; the prevailing stance remains the June 16-17, 2026 hold at 3.50%-3.75% with a hawkish SEP (median year-end 2026 rate 3.8%, one hike implied; PCE inflation projected 3.6%). A new data point this week: the June Employment Situation report (released July 2, ahead of the July 4 holiday) showed nonfarm payrolls of just +57,000, the weakest in four months and well below the ~110,000 consensus estimate. Markets responded by paring back Fed hike-risk pricing and gold rallied on the print. The Fed's own dot plot is unchanged, so the regime classification holds, but the weak jobs print is the first concrete data challenge to the hawkish path since the June SEP. Next FOMC is July 28-29, 2026. |
| Funding stress | POSITIVE | FRED-derived: -0.60 bps avg SOFR-IORB (2026-06-25 to 2026-07-01, 5 business days). SOFR held marginally below IORB through quarter-end and the holiday-shortened week; bank reserves jumped +$122.6B to $3.08T, remaining ample. No stress signals in repo markets. |
| Historical significance | POSITIVE | URLI-Core (4 data components, 75% weight) = +44.25 ranks in the 84th 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 +$81.5B. |
| High-beta alts | WATCH | Need both a positive URLI trend and BTC leadership to outperform. |
POSITIVE Supportive.
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 2026-07-03; previous week 2026-06-26; H.4.1 levels in $M, displayed in $B. |