MNI POLICY: Fed Assets Up $12B to $7T; Main Street Ticks Up

The Fed's balance sheet remained on an even keel over the past week, data released Thursday showed, as Main Street lending ticked up.

The Fed's balance sheet grew by USD12 billion to USD6.96 trillion as of Aug. 12. The total asset increase was predominately due to a bounce of USD14 billion in Treasury securities to a total of USD4.3 trillion.

This was partially offset as foreign currency swaps with other central banks continued to fall, this week by USD6 billion, to just under USD100 billion, the lowest since mid-March.

The loan balance under the Fed's Main Street Lending Program rose to USD226 million on Wednesday from USD95 million a week before. The program designed to assist small and medium-sized companies hurt by Covid-19 has had a sluggish start, and the Fed has faced criticism from lawmakers for the weak uptake so far.

Eric Rosengren, the leader of the Boston Fed, which administers the program, said this week that low early usage of the program is not a sign of failure, and more businesses may turn to the facility in the fall if the economy worsens.

Other facilities aimed at steadying liquidity conditions continued to decline or level off after an initial surge of usage in March when the Fed cut interest rates to just above zero.

The pace of corporate bonds purchases fell to its slowest pace thus far of USD12 million daily average, down from highs of USD300 million per day early on. Fed holdings of corporate bonds totaled USD12.4 billion, and no company has yet to tap the Primary Market facility to issue bonds.