Federal Reserve Balance Sheet Update: Week Of January 26 - $1.129 Trillion In UST Holdings

Tyler Durden's picture

The steady climb in Fed assets continues, with the left side of Bernanke's balance sheet swelling to just under $2.5 trillion,
as US Treasury holdings hit $1.13 trillion, implying that the Fed's
DV01 continues to increase on a daily basis with every single POMO, as we have been pointing out since last summer, and which the Fed decided to address last week by changing its "accounting" rules and guaranteeing its assets can never decline. The
differential between the US and China is now $233 billion and rising.
We expect our now second-largest creditor to realize the game theory
balance of leverage (no pun intended) is shifting away from its favor
(and to the Fed), and to respond accordingly. Alternatively, maybe someone will finally readjust the UK's holdings to properly reflect what could very likely be simply Chinese debt accumulation.

All numbers as of December 26:

  • Securities
    held outright: $2,224 billion, $18.5 billion more than the week prior.
    • Total

      Treasury holdings increased
      from $1.080 trillion to $1.129 trillion (inclusive of the last two days' POMOs).

    • MBS declined by $15.1 billion. 

    • Agency holdings declined by $1.2 billion to $144.6 billion.
  • Net
    borrowings: down to
    $25 billion.
  • Float,
    swaps, Maiden Lane and other assets: $178
    billion, $1 billion more than a fortnight ago. FX liquidity swaps were at $70
    million as that one bank continues to borrow the same amount for 5
    months now. The value of Maiden
    Lane I was $26.4 billion. Maiden Lane II was at $16 billion, Maiden Lane III at $22.4
    billion, AIA Aurora has now been paid off. And it is perhaps important to note that only the Federal Reserve would have "Other Assets" of $115 billion.
  • The monetary base was $2.050 trillion.
  • Reserve

    balances with banks: $1083 billion, an increase of $65 billion from last
    week. With assets increasing rapidly, it was about time this lagging liability category caught up.

  • Foreign holdings of USTs and MBS increased by $5 billion to $3.353

One thing to highlight in the data above:

  • After stagnating for a while, the MBS prepay has picked up again, and last week saw a cumulative $16.3 billion in MBS being put back to the Fed. This brings the total to $184 billion since the start of QE Lite. The last month's total MBS/agency prepay amounts to $30 billion which means that the Fed has an incremental $30 billion in Treasurys to purchase per the QE Lite mandate, although still run rates at less than the $2-300 billion the Fed hopesto achieve to get to $900 billion in bond purchases. As the MBS total on the Fed's balance sheet declines, it means there is an ever greater probability of MBS purchases being part of QE3.

And, as usual we end with our favorite chart, showing total UST holdings by the top 5 world institutions.

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RobotTrader's picture

With the recent Egyptian Meltdown....

Uncle Gorilla is certainly going to hold "emergency meetings" over the weekend to strategize on how to prevent an all-out collapse of the "Ponzi Pyramid"....

I suspect that by the end of the year, the 2011 graph of the Fed balance sheet will look like this:

bobert's picture

Humorous Robot. I like it!

Guess all other ZH's are on the Egypt story tonight.

slewie the pi-rat's picture


that hockey stick needs to be taped, RT, but at least it has the "V"!

yet, i find it somehow comforting that we have now found our "strong man" and just in the nick-o-time, too! 

and, blessedly, it is the very same accounting/FASB prophetic geniuses who brought us enron AND mark-to-the-moon, who have now transferred sovereignty, itself, to this savior of our nation, appointed by Bush, vetted and confirmed by the elect of the very People whose every need he shall fulfill.

he is our shepherd and yea, tho we walk thru the valley of the shadow of death, we will fear no evil, for our guy is the evilest son of a bich in the valley.

gwar5's picture

The dollar is being euthanized with a soft pillow of debt.

But, hey, the market is going up!  Except when it isn't.

topcallingtroll's picture

I dunno robo. I often agree with you, but usually in the past when the world feels insecure they head for liquid usa assets. Those insecure third worlders may do some of the heavy lifting for us.

snowball777's picture

'Usual' left the building two years ago.

CitizenWest's picture

"I suspect that by the end of the year, the 2011 graph of the Fed balance sheet will look like this:"

already does

Amish Hacker's picture

Five years ago I would have said this was impossible. And five years from now, what will the world look like? Absolutely stunning.

TruthInSunshine's picture

[sar]But!.....But!.....The Bernank is doing what's necessary to promote recovery and assist small businesses and the middle class!!![/sarc]





Xibalba's picture

Say HELLO to the beginnings of THE END. 


I can hear Jim Morrison singin to me now. 

Careless Whisper's picture

What 's the value of analysing an Unaudited Balance Sheet?


bobert's picture

Good question.

I've got one for you....

What's the value of treasury bonds in the fed's portfolio that they paid for with kyted checks?

Do they have a cost basis?

Just wondering.

Dr. Porkchop's picture

What does it matter, I thought they just declared that the FED can't be insolvent? They'll just change the rules when they run up against them.

Convolved Man's picture

So, we should be able to use our Fed's reserves to absorb China's foreign exchange reserves?  Need to get Goldman on this right away.  Some kind of SPV, risk tranched derivative to the nth power synthetic debt obligation -- AIG can insure it -- and give China exclusive investing privilege, like the Facebook deal.  Just don't let Goldman short it, or they will end up owning the world.

boeing747's picture

Since FRB is the biggest holder of Treasury so now banks have huge influence over nation's economy policies. Uncle Sam's fate is in Uncle Ben's hand. Somehow I suspect Eqypt Turmoil is a Dollar rescuing operation because we gonna have a Dollar Crisis in 60 days.

jdrose1985's picture


another dollar crisis?

essence's picture

While this is surely the butt of many jokes, the joke is now on us as the banking cabal (by the stroke of a pen) have transfered any losses going forward to the peons.

There once was a joke that after a nuclear war the only survivors would be cockroaches and man.


Update that now to cockroaches and the banking cabal.

Actually, on 2nd thought... that's redundant for they're one and the same.





Yen Cross's picture

Thank you kindly. A pleasant reminder to check the bond charts and yield spreads. Not Just T-notes. JGB's and the Bund spreads vs Piiglets.

poydras's picture

A large portion of the UK and Canadian holdings may be fractional reserve and Basel magic.

These numbers are too large to ignore.

Wilderman's picture

What's the total outstanding Treasury obligation?  => Fed's percentage?

Anyone know offhand?  Point me to the data?

Attached Fed Balance Sheet seems to show +/- 1.75T as of 1.28.11, any insight on the discrepancy?

bobert's picture

$15 Trillion total.

$7.5 T Public (Owed to people who expect to get their principal back like US citizens, Chinese etc.)

$7.5 T Non- Public (Owed to US agencies e.g., Soc. Sec./ Medicare/ Military Pensions.)

You know the federal reserve holdings so just do the math.

I've got more to say about this but I'm looking for a ghost writer. Any ideas for me?

LostWages's picture

We better hope the countries in turmoil don't figure out the Bernank is to blame for their troubles by exporting inflation everywhere.  To save their own asses they might deflect the blame to the Bernank and the US.  The Bernank being Jewish won't help. WWIII could be in the making, and history shows us wars often are started during 4th Turnings and the Middle East is a timber box.

jdrose1985's picture

the Middle East is a timber box.

One man's tinderbox is another man's timber box.

LostWages's picture

After several glasses of wine, they become one in the same....hic!

InconvenientCounterParty's picture

follow that thread of thought a little further.

Which state will be plaing the role of evil empire in the next WW?


chender's picture

RE "The differential between the US and China is now $233 billion and rising"

I am only an armchair economist, but I sense something big is coming.  What is the implication of that statement in simple english for a layman?

AUD's picture

The Reserve Bank of Zimbabwe wound up with a large portfolio of Zimbabwean Government bonds. And I'll bet they 'bought' them at a discount.

Zero Govt's picture

"Fed decided ...last week by changing its accounting rules and guaranteeing its assets can never decline.."

Fraud then! The Fed is committing fraud 'hiding it' in plain sight.

It's making a mockery out of the purpose of a balance sheet, to provide an accurate financial picture of the entity. They've turned the discipline into a delusional self-certified account of their own financial ability.

Federal Reserve 2011 Audit Statement (Official Media Release). 

Ben. "Mirror, mirror on the wall, who has the most handsome beard of them all?"

Ben (same Ben!). "You do you gorgeous yummy very hot bearded God, who could resist!"

PaperWillBurn's picture

This could make for a good guest post. GLD Outflow = Giant Inflow


max2205's picture

Ahem aren't those UK holdings really the Fed?! Need to restack

alfred b.'s picture


  ....remember that the Fed only divulges less than 10%  of what it's really doing...so if the bernanke discloses that he's doing 600 tr. of QE:   just how the hell do we know that he's not printing 4 tr. as Goldman was calling for! 

Overmore, it's the Fed that is backing the rigging of the stock market, long & short interest rates, the PM price suppression and and a variety of bailouts:  that has got to be costing the Fed some major money....and all printing is of course happening behind closed doors !! 



6 String's picture

I really don't understand how the Fed would unwind its Treasuries....how would that process happen? Can someone explain it to me?

I'm being serious. I understand the MBS coming in a mortgages are either re-fied or paid off....and that money could easily be unwound. But Treasuries? So even if they come due: who buys them from the Fed?

alfred b.'s picture

....it's again the fed doing the purchasing tru their Cayman account with some freshly-printed money......that IS the Ponzi scheme !!!

6 String's picture


If you look on pate 41, Japan did it. They unwound with a b.k. government. Why can't we?


bobert's picture

You deserve an answer:

The federal reserve sells treasuries that they have in inventory to the primary dealers (eighteen large international banks).

Them selling bonds at this time will cause more supply than demanded, hence, the price of said bonds will decline (simultaneously causing pressure for interest rates to rise).The federal reserve ostensibly does not want interest rates to rise at this time because it would damage the prospects for an economic recovery.

That's part of it. It gets more complex.

Have a good day lad.


slewie the pi-rat's picture


bobert, ya mean the supply of government debt actually exceeds the demand, so the FED is giving the Treasury the stuff (FRN "dollars", right?  money!) it creates by pushing a button, in exchange for the future labor, earnings, and wealth of the american people and our children?

could you also be intimating that if the FED were not to help our nation out in this doing-the -work-of-god-like manner, and the Treasury or FED just sold the bonds on the market, that interest rates would rise, thereby making such borrowing prohibitively expensive BEFORE we take the debt to whatever tf level it is now, and also that by actually SELLING the bonds instead of MONETISING them, no new money would be created, and the pols would have to get the gravy train under control and stop the criminal activity of robbing and defrauding the nation for the benefit of themselves, their cronies, and the bankers?  oh, and all the highly paid govenment "employees"? 

well, bobert, if that is true, that's just amazing, b/c, gee, i've had some of those same thoughts, myself!


bobert's picture

Aaaarg matieeee......

You have an interseting way of paraphrasing me.


6 String's picture

The federal reserve sells treasuries that they have in inventory to the primary dealers (eighteen large international banks).

Well, if they sold most of the treasuries to the PD's from the Fed's balance sheet, then the excess reserves just double from 1 trillion plus, to 2 trillion plus on the banks balance sheets....and the rise in the already parbolic increase in M2 would go wholly-parabolic, and distorted inflation would set off an fire-bombs in every country not western. This isn't called unwinding and isn't the intent, I believe.

Them selling bonds at this time will cause more supply than demanded, hence, the price of said bonds will decline (simultaneously causing pressure for interest rates to rise).The federal reserve ostensibly does not want interest rates to rise at this time because it would damage the prospects for an economic recovery.

Now, if you're talkin about them trying to unwind the position via selling them into auctions, I concur. But it would go bidless, and chaos would ensue.

* So, if they "unwind" by giving the Treasuries to the banks, it's crazy inflationary.

* If they unwind the Fed balance sheet in public auctions: chaos will ensue.

*If they wait until there is a U.S. surplus than we just hold our breath until we turn blue and die and they pull in the money.

Is that right?

bobert's picture

I love it 6 String:

Asking questions that you already have the answer to.

That's my style!

Have a good week in the markets!

You to Pirate!

6 String's picture

bobert, are you sayin' I have it right? Because I no shit really don't know. Thx for your help....and I hope you have a better week in the markets! Are those really the only options the Fed has?

bobert's picture

The fed has several options for influencing interest rates. Too complex to answer this late at night. Start reading the internet you'll get your answers. I and many others @ this site are bothered by new and inventive means that the fed is using to influence rates.  I'm a purist. I like the idea of non-intervention by the fed or anyone else. Free markets for me.

davepowers's picture


Where does one find the Fed balance sheet numbers you refer to? thanks

flow5's picture

Board of Governors Figures


The WSJ has a comparison between the releases


But the Balance sheet is a lot of BS.  After the discontinuance of the G.6 there is only one usable monetary metric.

And contrary to economic theory, & Nobel laureate, Dr. Milton Friedman, monetary lags are not “long and variable”. The lags for monetary flows (MVt), i.e. the proxies for (1) real-growth, and for (2) inflation indices, are historically (for the last 97 years), always, fixed in length. However, the FED's target?, seems to vary widely.

Short term money flows are accelerating. Long-term flows just bottomed. The combination obviously creates a high ratio of real to nominal gDp (a potential thorn for targeting nominal gDp - as opposed to inflation targeting). Next qtr we will see a big jump.                                                                                               The once named "maverick" bank provides data on the money stock.  Pay particular attention to Poole's MZM. Federal Reserve Bank of St. Louis U.S. Financial Data


davepowers's picture

thanks  flow 5

I was thrown off by his reference to Dec. 26 numbers. I figured it was a type, but maybe he was looking at something different.



ThirdCoastSurfer's picture

The differential between the US and China is now $233 billion and rising.

If every American man, woman and child throws in $100 right now, we can eliminate the imbalance.