Bank reserves surged $130B to $3.1T weekly average, but the move is a fiscal-pulse-driven bubble—TGA alone shrank over $100B as the sole engine, RRP buffer is exhausted, and future debt issuance will directly drain reserves.

A key reversal in USD liquidity this week: the drain from corporate tax payments and Treasury issuance at end-June has ended. A sharp TGA drawdown and net asset-side supply drove a $15.48B reserve rebound, smoothing the mid-year liquidity stress.

Fed balance sheet runoff deepens and the Treasury General Account remains elevated, causing a rapid drain on bank reserves this week. The system liquidity rating is downgraded from 'ample-to-neutral' to 'neutral-to-tight' as the RRP buffer flattens, directly transmitting Treasury issuance pressure to reserves—the core market tension.

The market faces a severe divergence between weekly averages and Wednesday point-in-time data: bank reserves averaged $3.03T for the week but plunged $175B to $2.94T on Wednesday alone. The core issue is the quarterly tax season pulse combined with a failed RRP buffer, marking the highest liquidity risk threshold this year.