A Tax Day Cash Drain Is Coming for Calm US Funding Markets

Wall Street strategists expect a robust increase in the Treasury’s coffers this week as Americans pay their taxes, potentially putting pressure on relatively calm US funding markets and spurring institutions to bolster their cash holdings.

While the short-term markets that underpin the nation’s financial system have been quiet this year amid the Treasury’s seasonal reduction in bill issuance and official maneuvers to boost liquidity, the status quo stands to be jolted by individuals and companies pulling cash from banks and money markets in order to meet tax obligations. That in turn, may spur banks to tap liquidity facilities to ensure they have enough cash on hand.