The Fed’s Balance Sheet Reduction (QT) Update
The Fed modestly reduced its Treasury holdings for the week ended October 4th as well as over the last four weeks. At this juncture we would lower the Fed Funds rate and ramp up QT in order to rid the system of the excess capital printed during 2020-2022. This is especially true given that Congress is about to drop a massive spending bill on us over the next couple of months regardless of the faux drama playing out in Congress. This spending will of course require printing as will the fiscal 2024 deficit that is sure to ensue.
Treasuries: The Fed’s Treasury security holdings declined by $28.1 billion for the week-ended October 4th and declined by $59.1 billion on a rolling 4-week basis.
Agencies: The Fed’s Government Agency security holdings were unchanged for the week-ended October 4th and declined by $19.1 billion on a rolling 4-week basis.
The Fed’s balance sheet holdings: https://www.newyorkfed.org/markets/soma-holdings
Excel file: Our Excel file detailing the Fed’s holdings of Treasury and Agency securities: HERE.
