Historic Day: Fed To Buy A Record $107 Billion In Securities Today Alone As Fed Balance Sheet Explodes

Back in December we predicted that at the rate "Not QE" (RIP) was going, the Fed balance sheet would surpass it all time high by late April. It turns out that we were overly optimistic: with the Fed relaunching QE over the weekend as part of what is now global helicopter money, it announced plans to purchase $700BN in Treasury securities and expanding it to MBS earlier this week. However, that was not enough, and in the past week the Fed scrambled to stabilize the Treasury market buying TSYs feverishly hands over fist in addition to soaking up as much securities as Dealers had in its repo facilities, and as of this moment the Fed's balance sheet has soared to a new all time high of $4.668 trillion.

As a reminder, the Fed balance sheet was $3.7 trillion in Sep, just ahead of the repo crisis, meaning that in the last 6 months it has grown at a 50%+ pace.

Putting the recent surge of purchases in context, here is what the Fed's "Not QE" looked like in purchase terms since it was restarted in October, and what March will look like.

Drilling down further on just the past week, starting with last Friday when the Fed announced several emergency POMOs, which were followed by Sunday's QE5 announcement, one can see how the crisis escalated in the Fed's eyes, and peaked today, when the Fed is expected to purchase a record $75 billion in Treasurys and a record $32 billion in MBS, for a total of $107 billion in security purchases just on Friday!

Finally, putting this week's emergency response in the context of the Fed's busiest week of post Lehman crisis activity, which was March 2009 when the Fed monetized $162 billion in securities, this week will be nearly double that, with the Fed buying $307BN in newly announced Treasury and MBS securities.

The scariest thought: the Fed just injected in one week almost the entire amount of liquidity it did in all of QE2 and it is barely enough to keep stocks from plunging.