The Fed’s Balance Sheet Reduction (QT) Update
The Fed continued to pursue its modest QT effort for the week-ended Wednesday December 20th. Over the past four weeks the Fed has tightened its Treasury position at approximately 57% of the pace at which it exercised its QE effort. Year-to-date the Fed has reduced its Treasury position by $702 billion. By contrast, the Fed purchased approximately $1.1 Trillion of Treasuries over a 12-month period during its April 2020 - May 2022 QE program.
The Fed has barely scratched the surface in terms of removing the $Trillions of excess liquidity it created in support of its QE effort and in support of the various monetary and fiscal spending programs that grew the money supply by $6.2 Trillion from February 2020 - March 2022.
Treasuries: The Fed’s Treasury security holdings declined by $17.4 billion for the week-ended December 20th and declined by $50.8 billion on a rolling 4-week basis.
Agencies: The Fed’s Government Agency security holdings declined by $3.4 billion for the week-ended December 20th and declined by $16.1 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.
