FED
Fed assets fell by $31B in the latest week (to Wednesday Feb 19), per the Federal Reserve's latest H.4.1 report, to the smallest size since May 2020 (total asset holdings were $6.782T) following a 3-week stall in the decline of the balance sheet.
- The latest weekly decline included a $15B decline in nominal Treasury bond holdings, with the remaining $16.5B attributable to non-SOMA / emergency lending factors ("other" assets largely consist of accrued interest).
- That brings the 4-week total drop to $49B, of which $37B is attributable to QT ($25B Treasury runoff, $12B MBS runoff), with emergency lending/liquidity facilities dipping slightly (of which, $0.4B in Pandemic 13-3 programs and $0.1B in the Bank Term Funding Program, offset by a $0.1B uptick in Discount Window takeup) and "other" assets dropping around $13B.
- Note that the Treasury runoff pace under the current QT cap ($25B) is almost exactly in line with the latest 4-week change; MBS has been running off at a $15B pace over the last 6 months, but the amount has been steadily declining over the last year as prepayments have ground to a halt - and there has been no week in which monthly runoff has even approached the $35B cap.
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