H.4.1 liquidity Watch // Issue #25
Three consecutive contracting weeks end. The TGA fell $41.1 billion, the RRP kept declining, and reserves rose $58.2 billion. Signal: Expanding.
The Weekly H.4.1 Breakdown
Issue #25 — August 6, 2026
Three contracting weeks end. The TGA gave back $41.1 billion of last week’s surge, the RRP fell for a third straight week, and reserves rose $58.2 billion. Signal: Expanding.
Both variables that had spent the last month draining reserves spent this week returning them instead. That’s not a coincidence worth overreading, but it’s not nothing either — the RRP decline in particular is no longer a single data point.
Quick Update — Week ending August 5, 2026
Four rows from Table 1, Wednesday column:
Reserve balances with Federal Reserve Banks: $3,002.7B (~$3.003T) — up $58.2B from last week
U.S. Treasury General Account (TGA): $929.3B — down $41.1B from last week
Reverse repurchase agreements (RRP): $319.4B — down $17.7B from last week
Central bank liquidity swaps: $0.1B — near zero, no signal
Liquidity Signal — Week ending August 5, 2026
Direction: Expanding
Primary Driver: TGA fell $41.1B — a partial reversal of last week’s $135.0B surge, the largest this series has tracked
Implication: Reserves rose $58.2B. The RRP added to the injection, falling $17.7B for a third consecutive week — no longer a one-off, now a pattern
4-Week Trend: Contracting / Contracting / Contracting / Expanding — first expanding signal in four weeks; both variables reversed direction together
What Actually Happened
Last week’s story was the TGA’s fastest refill this series has tracked — $135.0 billion in a single week, pushing the account to a three-month high of $970.4 billion. This week it gave back $41.1 billion, landing at $929.3 billion. That’s a real pullback, though it’s worth being precise about what it does and doesn’t undo: the account is now below June’s $956.5 billion local high, but still $77.9 billion above the $300–400 billion range this series treats as normal, and still well shy of April’s $1.007 trillion peak in either direction.
The RRP is the more interesting thread this week. It fell $17.7 billion, its third consecutive weekly decline, following last week’s $15.7 billion drop and the week before’s smaller $1.4 billion move. Combined, the RRP has fallen $34.7 billion from its recent peak — which answers the question this series has been asking since Issue #23: the two-week rise back in June looks like it was the anomaly, not this decline.
Reserves absorbed both moves and rose $58.2 billion, the first weekly increase since Issue #21 four weeks ago.
The Mechanics, Briefly
Reserve balances sit in the banking system’s collective account at the Fed. More reserves, more lending and investing capacity. Fewer reserves, less of both.
The TGA is Treasury’s checking account at the Fed. Money flows in from auctions and tax receipts, out through government spending. When the account grows, reserves shrink by roughly the same amount, and vice versa.
The RRP holds cash that money market funds park overnight at the Fed instead of lending it into the banking system. A rising RRP drains reserves; a falling one returns them.
This week: TGA down $41.1B (injection), RRP down $17.7B (injection). Net effect: reserves up $58.2B, with both variables working in the same direction for the first time since Issue #22.
The Streak Breaks, and So Does the RRP Pattern
Four-week signal history:
IssueWeek OfSignal#22July 15Contracting#23July 22Contracting#24July 29Contracting#25August 5Expanding
Three contracting weeks, each with a different mechanism underneath, are followed by an expanding week that reverses both of the variables that drove them. That’s a cleaner signal than this series has produced in over a month of oscillation.
The RRP’s third straight decline deserves more weight than the first two combined. One week is noise. Two weeks is a question. Three weeks pointing the same direction, after a two-week rise that briefly looked structural, is a pattern — and the pattern says the RRP’s longer-run drift is still downward, with June’s bump as the interruption rather than the trend.
Structural Context: The Ratio
The Claims on Reserves Ratio tracks how many dollars of demandable banking-system claims exist per dollar of reserve buffer. When reserves rise without a commensurate increase in deposits, the ratio falls — and this week it did, for the first time since this series began tracking it.
This week: 6.5×. Last week: 6.6×. Reserves rose $58.2 billion while deposits ticked up only slightly, pulling the ratio back down after last week’s sharp jump from 6.3× to 6.6×.
Last week’s jump raised a real question: was that the start of a faster climb, or a one-week spike? This week’s pullback leans toward the latter, though one data point in either direction isn’t a verdict. The September 2019 reference level sits at roughly 10×; at 6.5×, there’s still meaningful distance from that threshold. Worth remembering: the Standing Repo Facility introduced in 2021 gives primary dealers a way to borrow reserves against Treasuries at a known rate, so this ratio doesn’t carry the same fragility today that the same number would have carried before that facility existed.
Deposit data from FRED DPSACBW027SBOG (H.8 release). Due to H.8’s Friday publication schedule, deposits in this issue reflect July 22 data — roughly two weeks behind the August 5 reserve figure.
What to Watch
Whether the TGA keeps unwinding or stabilizes is the central question. It’s given back less than a third of last week’s surge — if the drawdown continues at anything like this pace, reserves could see another strong injection next week. If it stabilizes instead, this week may turn out to be a one-time correction rather than the start of a new drawdown phase.
The RRP’s three-week decline is now the more durable-looking trend of the two. A fourth consecutive week down would make it hard to keep treating June’s rise as anything other than a temporary deviation.
The ratio’s pullback to 6.5× is worth one more data point before drawing a conclusion. A second consecutive decline would suggest last week’s jump was noise; a return to 6.6× or higher would suggest the opposite.
The Bitcoin Lens
Three contracting weeks end with both of their drivers reversing at once — the TGA giving back part of a record surge, the RRP extending a decline that now looks like a pattern rather than a blip. None of this is a policy shift or a stress event. It’s the ordinary mechanics of a government account and a money-market facility moving in the direction they’ve moved most of this year.
Zoom out and the specifics matter less than the mechanism underneath them. The TGA is still comfortably above the historical $300–400 billion range regardless of which direction it moves next week. The debt that funds a government account this size creates dollars whether that account is filling or draining in any given week.
The dollar supply keeps finding a way to grow, week to week, in whichever direction the plumbing happens to be moving. Bitcoin’s supply doesn’t move at all. The long-run direction of the dollars is the long-run direction of Bitcoin’s price.
Source: Federal Reserve H.4.1 release, August 6, 2026. Claims on Reserves Ratio uses deposits from FRED DPSACBW027SBOG (H.8 release) and reserve balances from FRED WRESBAL (H.4.1).