The Fed’s Balance Sheet Reduction (QT) Update
We are about to see yield curve control. I believe that as the Fed allows mortgage securities to roll off of its balance sheet, it will offset that activity with Treasury security purchases. I believe the Fed will focus this effort on 10-year Treasuries, which will push the 10-year yield down. Sure, that will be good for businesses and consumers in the short-term, but frequent, heavy-handed Monetary intervention / support only creates Dollar devaluation over the intermediate to long term.
Treasuries: The Fed’s Treasury holdings declined by $6.0 billion for the week-ended March 19th. The Fed’s Treasury holdings declined by $16.2 billion on a rolling 4-week basis.
Agencies: The Fed’s Government Agency security holdings declined by $51.2 million for the week-ended March 19th. The Fed’s Government Agency holdings declined by $14.3 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 over time: HERE.
