Federal Reserve Balance Sheet Update: Week Of September 9
Total Federal Reserve balance sheet assets for the week of September 2 of $2,071 billion ($8 billion higher compared to the prior week's $2,062 bn) consisting of:
- Securities held outright: $1,501 billion
(an increase of $128.7 billion MoM, resulting from $32.6 billion in new
Treasury purchases, $82.4 billion increase in MBS and $13.7 billion in Agency Debt), or $10.7 billion increase sequentially
- Net borrowings: $320.3 billion, a decline of $5 billion compared to two weeks prior
- Float, liquidity swaps, Maiden Lane and other assets: $248.9
an $2 billion decrease on ongoing $1 billion reduction in CPFF (an
issue discussed repeatedly by Zero Hedge) while liquidity swaps, after bottoming out recently and gradually reversing, have again declined by $2 billion sequentially.
Most notably, foreign holdings decreased by the biggest amount in almost a year, by $5.7 billion - from $2,832 billion to $2,826 bn. This is a very surprising twist, especially in light of the several very "successful" UST auctions which would have definitely resulted in an increase in foreign holdings. The reason for the discrepancy is one of those items that HR 1207 will eventually have to address.
The monetary base was virtually unchanged at $1,763 billion. Total depository reserves increased by $30 billion to $886 billion - the banks are lending even less! Didn't Geithner in testimony perjure himself by claiming how banks are lending our more than ever during the span of the recession? Exhibit A is just this number, which is the highest since the end of May 2009. The actual despoited cash is likely used by these institutions to purchase Treasuries thereby making the auctions such a sterling success (and, if they have a hun to their head - MBS and Agencies).
The ratio of Fed Assets to the Monetary Base was unchanged at 1.17x, indicating that once again the Fed is unable to extract the full benefit of its humongous balance sheet in flooding the economy with liquidity. And where does it go? Chasing shares of AIG, C, CIT, FNM and FRE of course, with the complicit assistance of a thousand identically momentum factored quant programs.