Fed INCREASES $4.2 Trillion Balance Sheet By (Drumroll) … $1 Million

The Federal Reserve is shrinking their prodigious balance sheet by baby steps.  Like Steve Martin doing Michael Jackson’s Billie Jean.

According to the NY Fed, their securites holdings INCREASED by $1 million from th previous week rather than shrinking it. Not decreased, mind you,  but INCREASED.


T-note and T-bond holding remained the same while Agency MBS holdings rose by $1 million.


Way to unwind, Fed!



Bad Juju! US Treasury 10Y Term Premia Crushed As Fed Unwinds Treasury Note/Bond Holdings

Its going to be bad juju (or in coming weeks) for some Treasury investors as The Fed continues its “great unwind” of their $4.4 Trillion balance sheet.

As The Fed dumps their Treasury Note/Bond holdings, the 10 year Term Premium declines. The Term Premium is the compensation that investors require for bearing the risk that short-term Treasury yields do not evolve as they expected.


Have a holly, jolly Christmas as The Fed unwinds its balance sheet!



Fed Balance Sheet RISES By $13 Billion (Needs To Come A Little Bit Closer To Their Target)

So much for The Fed balance sheet unwind.

The SOMA report as of yesterday showed the balance had RISEN by $13 BILLION.


This happens every quarter.


The reason why? Agency MBS purchases rose faster than Treasury Note and Bond sales (which were small).


But the balance sheet will likely get a little bit closer to shrinking by next week.


How Long? Fed Finally Starts Shrinking Balance Sheet .. By 0.27% (Will Take 7 Years To Unwind At This Rate)

Finally, The Federal Reserve has started shrinking its prodigous balance sheet. By a whopping 0.27%.

According to the New York Federal Reserves’ System System Open Market Account (SOMA) report for November 29, 2017, the Fed’s balane sheet shrunk by 11.59 billion from the previous week. Or 0.27%.


How long … will it take The Fed to shrink (unwind) its balance sheet at this rate?

Around 360 weeks. That is about 7 years.

That’s how long.


Fed’s SOMA Increases $462.6M (Shrinking Balance Sheet Still Elusive)

Today, The Fed of New York release their weekly System Open Market Account (SOMA) Holdings. And it rose $462.6 MILLION instead of declining.

soma1123The balance sheet shrinking was supposed to begin in October, and it is now officially after Thanksgiving in November.


Apparently, The Fed wants to keep all the bacon and eggs that they have.



Wyld Stallyns: Fed GROWS Balance Sheet (SOMA Rises $1.72 BILLION In One Week)

The Federal Reserve was supposed to start unwinding their balance sheet in October. It is now mid-November and the Fed Balance Sheet is growing rather than unwinding.

The System Open Market Account (SOMA) Holdings as of November 15, 2017 showed that their balance sheet actually grew by $1.72 BILLION.


So, The Fed has not started unwinding their balance sheet.


Yes, Stanley S. Fischer, Esq. and Jan ‘Janet’ Yellen are … WYLD STALLYNS!!!!!!


Where’s The Unwind? Fed Actually Adds $15 Billion To Balance Sheet (As “Inflation” Remains Low And Home Prices Soar)

The Federal Reserve has been jawboning their intent to unwind their almost $4.5 trillion balance sheet, nearly all of which is either Treasurys or mortgage-backed securities.

The Fed’s Balance Sheet has pretty much been on hold (treading water) since 2014 and the end of QE3, their third round of asset purchases.


But the System Open Market Account (SOMA) report from 9/13/2017 shows that The Fed actually added around $15 billion to its balance sheet.

soma091317So, no balance sheet unwind yet.


Remember, The Fed’s notion of inflation (US Personal Consumption Expenditure Core Price Index YoY) remains under their target rate of 2% at 1.40% YoY.


And core CPI growth YoY is at 1.7%, also under the 2% target.


And with asset prices such as for housing exceeding wage growth by over 2x, The Fed has quite a bit to consider before pulling the handle on the balance sheet unwind.


The US Treasury 10Y-2Y curve slope has declined from around 280 basis points in 2010-2011 to under 82 basis points today.


Here is inflation that is hiding that The Fed doesn’t want to consider.