Peter's Blog

Fed Reduces Treasury Bill Balance By Over $100B in May

The Fed reduced its balance sheet by $177 million last month. The majority of this was actually in Treasuries with less than 1-year maturity, totaling $102B. The next biggest reduction was in loans, totaling $40B.

Bank Term Funding Program Reaches New All-Time High

The Fed is still bailing out banks. The Bank Term Funding Program (BTFP) reached a new all-time high in April, suggesting that the banking crisis has not yet passed. And while the aggregate balance sheet looks to be shrinking, the detailed data shows it is more complex than that.

The Fed Prints $324B in March As QE Restarts

By now it should be common knowledge that the Fed has blown up its balance sheet rather quickly to combat the current banking crisis. As the chart below illustrates, the Fed added a gargantuan sum to its balance sheet in March, netting an increase of $324B.

The Fed Books a Loss of $126B in February

The Federal Reserve came close but still fell short of its $95 billion per month balance sheet reduction target through the last full week in February. This means the Fed has fallen short in 8 of the last 9 months. And with rising interest rates coupled with even this modest balance sheet reduction, the Fed […]

QT Falls Short Again and the Fed Lost Almost $100B in January

The Fed has a targeted balance sheet reduction of $95B a month. The Fed has failed to meet its target in 7 of the last 8 months with only an $81B reduction in January. The Fed fell woefully short of meeting their $35B MBS target, seeing only $16.7B (less than 50% of the target). The Treasury […]

The Fed has Missed the Balance Sheet Mortgage Back Security Reduction Target Reduction Every Single Month

The Fed has a targeted balance sheet reduction of $95B a month. After reaching and exceeding this target last month, the Fed is back to undershooting. This should not come as a surprise given the turmoil in the bond market this year and the lack of liquidity.

Fed Has $48B Loss in November and Sees Massive Balance Sheet Reduction

The Fed has a targeted balance sheet reduction of $95B a month. Up until this point, the Fed had failed to reach its target almost every month since QT began. In the latest month, the Fed made up for their recent shortfall with a big balance sheet reduction of $139B, exceeding their target by 50%! Despite the larger-than-expected […]

The Fed is Still Coming up Short on QT

The Fed is supposed to be reducing the balance sheet by $95B a month. This is up from $47.5B before September. As the chart below shows, the Fed has only succeeded in meeting or exceeding its goal a single time (August) in 6 months. In the latest month, the Fed came up 25% short with a […]

Surprise! Another Month = Another Failed Attempt at QT

The Fed has found it easier to raise rates than shrink its balance sheet. September was supposed to be the month when the Fed got serious about shrinking the balance sheet. After a few months of warming up with $47.5B monthly reductions, the Fed was going to step up in September and shrink by $95B ($60B in […]

Is the Fed Worried About the Mortgage Market?

Is the Federal Reserve worried about the tanking mortgage and housing market? If their holdings of mortgage-backed securities (MBS) are any indication, the answer is, yes. The Fed has finally started shrinking its overall balance sheet as promised, but they are not shedding MBS according to plan.