The Fed’s Balance Sheet Reduction (QT) Update
Soon, the Fed will relax its muted QT effort as it steps up to buy Treasuries, filling the void left by Japan. This will likely happen in June causing the economy to further inflate. Forget the percentage change in CPI, the absolute price level has risen to such a point combined with higher rates that I do not see how the economy does not continue to slow. If CPI/price deflator was a real number rather than a Government construct, one would see that the economy is not growing on a unit/real GDP level and that the only thing keeping the U.S. economy afloat is deficit spending, which by definition is not real economic growth. When this ultimate game of musical chairs ends, it is going to be ugly. Until then, both the Democrats and Republicans will continue to inflate the fiscal debt ($35 Trillion and counting), while reducing the purchasing power of the Dollar. Unless of course the American people throw everyone out of Congress who does not vote “NO” on the various omnibus spending bills. The fat bureaucracy that is the United States Government needs to be starved. All Federal agencies need to be radically downsized or eliminated - just as the private sector is doing at this moment in many cases.
Treasuries: The Fed’s Treasury security holdings declined by $22.6 billion for the week-ended May 1st and declined by $57.6 billion on a rolling 4-week basis.
Agencies: The Fed’s Government Agency security holdings declined by $12.7 billion the week-ended May 1st and declined by $16.4 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.
