The Fed’s Balance Sheet Reduction (QT) Update

Very modest tightening for the Fed this week. The Fed’s balance sheet remains inflated at $6.9 Trillion, only $2 Trillion below the April 2022 peak and 53% higher than the pre-COVID plateau of $4.5 Trillion. I am not bullish on Trump’s ability to cut spending if social media posts offer any clue. The masses say they want fiscal austerity, yet in the same breadth / post, many say “don’t cut Social Security, Medicaid or income assistance”. Americans are not ready to kill the Welfare state, therefore inflation / a devalued Dollar will remain for some time.

• Treasuries: The Fed’s Treasury holdings declined by $7.7 billion for the week-ended December 4th. The Fed’s Treasury holdings declined by $25.1 billion on a rolling 4-week basis.

• Agencies: The Fed’s Government Agency security holdings were unchanged for the week-ended December 4th and declined by $17.0 billion on a rolling 4-week basis.

• The Fed’s balance sheet holdings: https://www.newyorkfed.org/markets/soma-holdings

Source: Federal Reserve; TEK2day