Federal Reserve Balance Sheet Update: Week Of February 18 - New Records In Total Assets And Excess Reserves

The Federal Reserve's balance just hit another record high, at $2.29 trillion, jumping by a whopping $54 billion sequentially (the biggest weekly increase since mid-November). 

  • Securities held outright: $1,967 billion (an increase of $60.9 billion MoM, resulting from $56 billion increase in MBS and $5 nillion in Agency Debt), or a huge $53.6 billion increase sequentially. The fed is now 95% complete with its purchases of MBS, and 96% complete with purchases of Agencies. The Fed has completed $167.2 billion of its $175 billion agency debt purchase program through February 17. The Fed's MBS total is now $1.188 trillion, and by the end of the first quarter of 2010, the Fed will have purchased $1.25 trillion.
  • Net borrowings: $127 billion. The monetary base increased by $50 billion in the past fortnight to $2.06 trillion. The ratio of total assets to Monetary Base remained constant at 1.08x, elevated from the historical ratio of 1.00x.
  • Float, liquidity swaps, Maiden Lane and other assets: $194 billion. The CPFF program was at $7.7 billion. FX liquidity swaps are now non-existent. Maiden Lane I and Maiden Lane II somehow increased and were $27.2 and $15.5 billion, while Maiden Lane III as always continues pretending it has value and came at $22.4 billion.

Custody foreign securities holdings increased by $2.8 billion to $2,959 billion.

The amount in excess reserves with FR Banks has once again reached a record high of $1.14 trillion. The ratio of currency in circulation ($922 billion) to MBS and Agency holdings has hit a new low, as ever more MBS securities back the full lack of faith and credit in the FRNs.

Some details about the least discussed pseudo budget obligation: the GSEs, from the Atlanta Fed.

  • The 30-year fixed rate averaged 4.97%, down from 5.01% a week ago; the 15-year fixed rate averaged 4.34%, down from 4.40% a week ago.
  • At this time last year, the 30-year fixed rate averaged 5.16%; the 15-year fixed rate averaged 4.81%.

In the chart below observe the rate on 30 and 15 Year fixed Freddie loans: the 30 year, which was between 6 and 6.5% just before the advent of QE, has since ground 150 bps tighter. We are certain that this number will blow out as much if not more once the Fed is out of the housing market yet again.

The mortgage application volume has also subsided, meaning that if anyone was going to refi due to the lower rates, they already have. At this pointkeep rates where they are is overkill from a new/refi application point of view.

  • For the week ending February 12, total mortgage application volume and total refinance application volume decreased from the previous week. Total mortgage application volume decreased 2.1% from the previous week; total refinance application volume decreased 1.2% from one week earlier.
  • The refinance share of mortgage activity represented 69.3% of total applications.