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Free AccessMNI POLICY: Fed Balance Sheet +$54B to $7.06T; MBS Tops $2T
The Fed's balance sheet jumped USD54 billion over the past week to USD7.06 trillion on MBS and Treasuries purchases, data released Thursday showed.
The Fed's total portfolio is up 67% since early March at 36% of U.S. GDP. Total assets peaked at a record USD7.17 trillion in early June but had since remained steady near USD7 trillion.The Fed's holdings this week were driven by purchases of mortgage-backed securities, rising USD55 billion to a record at just over USD2 trillion.
Treasuries increased USD13 billion to USD4.4 trillion, a new record high. Fed Chair Jerome Powell on Wednesday affirmed plans to continue QE to support an economy reeling from Covid-19, with buys of at least USD80 billion per month of Treasuries and at least USD40 billion of MBS.
"There are various ways and margins there we can adjust our tools going forward and we'll continue to monitor developments and we're prepared to adjust our plans as appropriate," Powell said.
The central bank's balance sheet growth was partially offset this week as holdings of currency swaps with foreign central banks continued to roll off its portfolio by USD20 billion to USD52 billion.
FRICTION WITH CONGRESS
Other facilities aimed at supporting markets have remained steady after early surges in March when the Fed announced programs and cut interest rates to near-zero.
The Main Street Lending Program was up USD65 million to USD1.4 billion, and the corporate bond purchases continued at USD96 million over the previous week reaching a total of USD12.9 billion.
The Fed's Municipal Liquidity Facility remained steady at USD1.6 billion and was again under criticism from lawmakers this week from both sides of the political aisle. While Democrats criticized the program for not taking on greater risk, Senator Pat Toomey, a Republican of Pennsylvania and a member of the Congressional Oversight Commission, recommended Thursday that the Fed and the Treasury shut down the muni program as market conditions have improved and states and localities have begun issuing debt again.
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MNI is the leading provider
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