The Fed’s Balance Sheet Reduction (QT) Update

The Fed continued its modest QT effort, shrinking its Treasury holdings by $15.5 billion for the week. Year-to-date the Fed has reduced its Treasury holdings by $596.7 billion. Compare this to the Fed’s recent QE effort which saw the Fed purchase approximately $90 billion of Treasuries per month, or approximately $1 Trillion of Treasuries per year during the 2020-2022 COVID-driven QE/Bailout period. The Fed’s QT effort is weak.

• Treasuries: The Fed’s Treasury security holdings declined by $15.5 billion for the week-ended October 18th and declined by $48.8 billion on a rolling 4-week basis.

• Agencies: The Fed’s Government Agency security holdings declined by $74.3 million for the week-ended October 18th and declined by $14.8 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.