Free Trial

Goldman Look For $650-700bn Terminal Growth In Fed B/S

FED

VIEW: Goldman Sachs notes that "over the past month and a half, the
Fed's b/s has contracted despite ongoing QE & a gradual increase in
several 13 (3) facilities' usage. This contraction was the result of a rapid
decline in the use of both TOMOs & FX swap lines; the former dropped
from about $200bn to zero, largely following the Fed increasing the
minimum bid rate on these operations, and the latter dropped from a
peak of about $450bn to ~$118bn. While we had anticipated a decline
in both components, the pace has been quicker than we exp.;
combined with relatively gradual growth in the CCF & MSLP Programs,
we believe there may be some modest downside risk to our projected b/s
path through the remainder of the year. Nevertheless, with repo now at
0 & the more limited room for declining FX swap lines to contribute
to an overall reduction in Fed b/s size, we exp. that the recent growth
over the last 2 weeks will continue, primarily due to continuing Tsy & MBS
purchases. The final size is likely to be $650-700bn > current levels."

MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.