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Federal Reserve Balance Sheet Update: Week Of September 2

Courtesy of Tyler Durden

Total Federal Reserve balance sheet assets for the week of September 2 of $2,070 billion ($20 billion higher compared to the prior week’s $2,049) consisting of:

  • Securities held outright: $1,491 billion (an increase of $136 billion MoM, resulting from $43.7 billion in new Treasury purchases, $81.4 billion increase in MBS and $11.4 billion in Agency Debt), or $11.7 billion increase sequentially
  • Net borrowings: $327.6 billion, no change from the prior week as number updated biweekly
  • Float, liquidity swaps, Maiden Lane and other assets: $251.4 billion, an $8 billion increase on a continued $4 billion reduction in CPFF (an issue discussed previously on Zero Hedge) however liquidity swaps as expected, have bottomed and last week were increased by $3 billion to $63 billion.

Foreign holdings increased by $6 billion to $2,832 billion. Foreign holdings continue to lag the Fed’s own purchases of US securities.

Another useful representation of the Fed’s balance sheet expansion is the comparison of the Total Fed Balance Sheet to the Monetary Base (as disclosed). What is interesting is that while the ratio has historically been 1.0x, it briefly touched a high of 1.6x once the liquidity spigot was turned on Max, but has since stabilized and is hugging the 1.2x ratio. This indicates that in terms of pure monetary impact on circulating money, the Fed is now running at about 80% efficiency on its Balance Sheet expansion, whereas prior to Lehman this was roughly at 100%, as expected. The 20% shortfall is curious, and begs the question whether it is all due to excess depository reserves being stuck at banks instead of being lent out, or if there is something more structurally flawed at play.


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