The major categories provided within the TIC estimates are a breakdown between private “flows” and those from official sources, such as foreign government and central bank accounts (as much as is known). In terms of those larger segments, there wasn’t really much of note in the update for November. There is some indication that foreign central banks might have become more active in “supplying” “dollars” after what took place on October 15, but that is a tentative suggestion at this point.

ABOOK Jan 2015 TIC Official 6

Overall, TIC flows were pretty benign when it was far more expected to see obvious distress given what has taken place. In terms of private flows, overall inward purchases continued to be mute as they have really since taper in the middle of 2013 rather than something of a sharp drop (outward).

ABOOK Jan 2015 TIC Private 6

The behavior here is not unlike that in previous crises where “dollar flows” are something more than irregular even in retreat. However, the Treasury Department is kind enough to also supply a further breakdown in that “private” segment of the “dollar market.”

Under the heading “Other: In Banks’ Own Net Dollar-Denominated Liabilities” we get at least some isolation of just the banking end of all this, separated from non-financial participation. The November data in this area points to perhaps the focus of recent “tightening.”

ABOOK Jan 2015 TIC Bank Liab Longer

These estimates are, of course, only what has been measured in the official bank data, leaving a good deal still unseen and unmeasured. Even with that deficiency, there is clearly a signal of declining “dollar” liquidity as pertaining strictly to the financial end. The other side of those declines highlighted above is the seemingly obvious impetus as to why financial participants and agents would expand “dollar” financing so dramatically in those discrete upward episodes in the first place.

ABOOK Jan 2015 TIC Bank Liab Shorter

In many ways, it fits almost too perfectly to be believable as anything other than a backfilled plug-line. There can be no doubt that the monetary affairs of the Federal Reserve, through the Open Market Desk, would have just such an effect on the way up. And that would also make sense about thereafter each unique QE construction, as bank balance sheet calculations look very different, in terms of risk management and balance sheet capacity, during and after each QE. In other words, this would tend toward strong confirmation that banks take an amplified position solely on what the FOMC is up to (or not up to), rather than a more fundamental sense of economy and “value.”

Whether or not that is self-fulfilling or the further unmasking of deeper and unalleviated distress is almost beside the point now. It is very possible that QE simply acted, as I have referred to it before, as an anesthetic that hid the actual and continuous pain of desperate imbalance inside a financial euphoria of artificial exuberance. Or it could be that banks actually created the complacency that QE’s designers envisioned for it. In whichever case, none of it matters as it is clear that QE holds no permanence or even slightly lasting durability beyond its closed parameters.

As to the most recent affairs, the turns in 2013 (with taper threats) and then 2014 (starting in June) dovetail exactly with these increasingly desperate periods of global “dollar” difficulties in funding. What matters is less the absolute rate of change (delta) but rather the acceleration in either direction (which is steep in both breakouts of “tightening”).

My interpretation here is that these estimates are consistent with a balance sheet adjustment purely of financial participation at this point driving “dollars” toward greater scarcity (rising “price”). That would seem to be complementary toward what I presented of the Swiss banking data last week, along with many other suggestions from other facets of pure financial function (especially repo). While these figures are a few months behind, they are no less helpful in pointing a finger at the probable culprit; from that we can extrapolate, carefully, continuation or counteraction (as in the case of “official” action, in both directions; SNB vs. ECB or Banco do Brasil, etc.).