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Federal Reserve Balance Sheet Update: Week Of August 5
Total Federal Reserve balance sheet assets for the week of August 5 of $1,988 billion consisting of:
- Securities held outright: $1,354 billion
(a monthly increase of $125 billion MoM, resulting from $35.9 billion in new
Treasury purchases and $80.4 billion increase in Fed Agency Debt) - Net borrowings: $282 billion (a decline of $57 billion month over month)
- Float, liquidity swaps, Maiden Lane and other assets: $282 billion
(a recent record decrease of $76 billion month over month due to a continued reduction in Central Bank
Liquidity Swaps ($49 billion) and ($32) billion in CPFF outstandings). - Foreign
central bank liquidity swaps are again at the lowest level since the Lehman bankruptcy ($77 billion) - the level in 2008 pre-Lehman was $62 billion. The Fed is aggressively recalling any and all liquidity swaps.
Foreign holdings
of USTs and Agencies increased by $23.5 billion monthly to
$2,810 billion from $2,787 billion in the prior month. This is now about 20% less than the comparable increase in Securities Held Outright by the
Federal Reserve, implying foreign purchasers are starting to fall far behind in their purchases of US securities relative to the Fed's monetization rate.
The Federal Reserve's Monetary Base number of $1,663 billion was unchanged from the prior week.
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"almost $160 billion in agencies purchased in the last two weeks"
Is it safe to say the government is propping up the housing market? Wonder where house prices would be if Fannie and Freddie were allowed to fail?
QE is a pretty name for skipping the banks to expand the money supply. With all the borrowing need by Obamaco and wanting to prop up housing, the Fed will never sell any of that paper back.
After all news and theories are pleading for higher long term yields? Simple
I think they want all Americans to mortgage their house again and buy securities, because this bull market is going to last forever!
As a curiosity, look at the change in Maiden Lane III since May. ML III is the vehicle created to assume AIG's CDOs. It has dropped some $6.1 billion since May, or about 22%. One guess as to who absorbs that mark down.
Does the green in the chart represent green shoots?
That is quite a mountain of.......confidence. Sure hope people don't lose the confidence cause that mountain of confidence could turn into a mountain of toxic you know what.
where is the ZH analysis of the unemployment report released this morning?
how about posting yours first?
Thank you.
Payrolls fell by 247,000 vs 443,000 in June, which was revised down from 467,000. Expectations for this month ranged from 150,000 to 460,000. Unemployment dropped from 9.5 to 9.4. Labor force participation declined by 442,000 people, or 0.2 percent and average duration of unemployment increased to 25.1 weeks from 24.5 weeks. Hours worked per week increased from 33.0 to 33.1 and average weekly earnings increased three dollars to $614.34.
With 154 million people in the labor force, any increase in weekly average earnings is important. Typically end-of-recessions periods see an increase in labor force participation.
And of course, this is only 'released' data.
I'd be curious to see the numbers from a .. you know .. an actual .. AUDIT!.
The details given here are misleading, but the sentiment is probably right. The Federal reserve balance sheet is not expanding as a total at the moment and we should remember that foreign holdings are only part of the story with local institutions also having holdings.
In terms of Agency debt then only the FED is funding this at the moment. I don’t see that changing even if mortgage rates go up 3 percent which means the FED will need to keep the purchases up. There is no exit plan other than hoping somebody will eventually start buying agency debt.
There is a risk that QE is used to support fiscal deficit and accrued interest such that it can never be fully withdrawn without serious economic damage. In which case once foreign central banks get a hint of this they will withdraw even more.
In terms of treasury debt then I think all the demand is at the short end and perhaps what we should notice is that where 2 year securities were desirable recently they are less so now. Will there come a time when all the treasury can sell is monthly debt ?
Go ahead Tyler, do the unthinkable and destroy something exceptional. Building an exceptional blog takes time, hyperventilating (as NakedCapitalism nails it) on everything that goes against your opinion sure helps destroy things fast.
Look at the picture from a non-partisam perspective, the world has and will not end due to this crisis.
If you think this blog is partisan, there is nothing that can help you, your mind is shattered.
I sure cannot understand the Anons here, let me say this, if you think the market is all hunky dory and dripping with honey. Why don't you go ahead and start your own blog and stop advising TD what to do. Uncalled for advice is cheap.
Classic way of using a graph to exacerbate your point... by cutting of the lower end of the graph it seems so more impressive. You don`t need to do that, you know.
Also, the Fed is not "aggressively recalling any and all liquidity swaps", they don`t need to do that. The reduction in swaps is a result of diminished demand for them from the foreign central banks. With balance sheets of banks being restored and libor coming down to record low levels, nobody wants to borrow from the ECB or the bank of Japan at 1.24 % fixed rate anymore. If no banks come to the foreign central banks, the money flows back to the Fed and the usage is reduced.
Sorry, the 1.24% was incorrect, it is actually variable but around there. If you look at the ecb website, you can see how little use is being made of the TAF.
http://www.ecb.int/mopo/implement/omo/html/index.en.html
These are fixed rate tenders with full allotment, so anyone who wants can get as much as they want. They clearly don`t want it anymore.
Not to defend Tyler because i trust he is a big boy and can do that all on his own but the graph, as presented above, is consistent with the manner of previous presentations on this issue.
But if you have a different version or interpretation of the material presented herein, why don't you submit it ZH?
I am sure he has himself.
An example would be: http://macroblog.typepad.com/.a/6a00d8341c834f53ef0111685017d8970c-popup
By starting at 500 the increase looks more than it is. It is about 3 times pre crisis, but now it looks like 5 or 6 times pre-crisis.
"It is an undeniable fact that, ever since the Fed was visited upon us in 1914, our inflations have been more intense, and our depressions far deeper, than ever before." - Murray Rothbard
Don't just audit it, shoot it.
From the chart, we can see that it's rising. prepaid cell phones