Fed Securities Holdings Pass $2.5 Trillion As MBS Prepays Grind To Halt, "Other Assets" Hit Record

Tyler Durden's picture

For the first time (and when it comes to the Fed's balance sheet that phrase will be heard many times) the total notional value of Treasurys, MBS and agencies held by the Fed surpasses $2.5 trillion. $2.518 trillion as of May 11 to be precise, of which Treasurys amounted to $1.466 trillion (excluding today's POMO), $927 billion in MBS (unchanged for the third week in a row), and $125 billion in Agency paper. The total is an increase of $24.4 billion from a week prior. Following the last schedule and a half of POMO, it appears the Fed will hold approximately $1.6 trillion in total debt. On the liabilities side, to go with all this debt, the Fed also had a total of $1.544 trillion in total bank reserves (including excess and required), also a record. As the chart below shows, reserve growth has slowed down substantially after it overshot materially following the unwind of the SFP program designed to provide the Treasury with debt space. As noted above, and as we discussed previously, the level of prepayment of the Fed's agency portfolio has slowed substantially (as confirmed by this month's forecast of only $13 billion in monetizations via QE Lite), which means the natural roll off of and remonetization of the Balance sheet will be far slower than some expected. Total Fed paper maturing in under a year continues to be just under $150 billion: a number we don't expect will change substantially. Elsewhere, total other assets continue to climb, and have now hit another record of $130 billion. Lastly, the Fed's lead on the second largest holder of US debt, China, continues to increase.

Total assets:

Maturity distribution of Fed assets:

Slowing MBS prepayment:

Other Fed assets:

And top debt holders of US debt: