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MNI POLICY: Fed Assets +USD19B to USD7.07T

Foreign repo pool hits 5-year low dipping to USD189B


The Fed's balance sheet assets increased by USD19 billion over the last week to USD7.07 trillion on Treasury purchases, data released Thursday showed, also indicating that the size of the Fed's reverse repo pool for foreign official institutions slipped to the lowest level since late 2015.

The Fed's increased holdings were driven by nominal notes and bonds that were up USD24 billion as total Treasuries almost reached USD4.5 trillion.

The growth was offset by an overall decline in the central bank's emergency lending facilities from March as currency swaps with foreign central banks fell again by USD8 billion to USD16 billion, a new low since March.

The Fed's total assets peaked at a record USD7.17 trillion June 10 but has since stalled as asset purchases have continued, generally matching the roll off of the Fed's emergency measures. The total portfolio is up 67% since early March reaching 36% of U.S. GDP, and analysts are predicting it could peak at 40% of GDP.

On the liabilities side, the Fed's RRP pool for foreign official institutions has fallen from a recent high of USD287 billion on April 1 to USD189 billion, a five-year low. Analysts predict it probably has room to fall further in the months ahead.

The Treasury's cash balance at the Fed also declined by USD94 billion to USD1.7 trillion, generating a corresponding increase in bank reserves by USD120 billion to USD2.9 trillion.