Confounded Interest - Online Course Notes for Financial Markets

Fed Balance Sheet Shrinks By $2.5 Billion (Starts Resembling a 30-year Mortgage)


The New York Federal Reserve has released their weekly SOMA (System Open Market Account) report. And as of December 6, 2017, SOMA has declined by $2.5 billion. To $4.2 TRILLION.

How big is $2.5 billion unwind? It is so big that you can barely see it!

At this rate, it will take around 30 years to fully unwind the balance sheet. About the same length as a 30 year mortgage. As in 1,685 weeks at this rate.

All this as the Treasury curve keeps flattening towards zero.

“I’ll be long gone before this suckers unwinds!”