The Fed’s Balance Sheet Reduction (QT) Update
The Fed picked up the QT pace this week as elevated prices are stickier than the Fed believed they would be. The Fed took its balance sheet from $4 Trillion to $9 Trillion over two years (Mar 2020 - Mar 2022). Inflating the money supply to such a degree was of course going to take years - perhaps a decade or more - to correct itself.
Treasuries: The Fed’s Treasury security holdings declined $35.0 billion for the week-ended April 17th and declined by $81.5 billion on a rolling 4-week basis.
Agencies: The Fed’s Government Agency security holdings declined by $195 million the week-ended April 17th and declined by $11.8 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.
