FED
The Fed's latest H.4.1 release showed virtually no change in the central bank's asset holdings, including no runoff of Treasury/MBS holdings (which have been running at an average of $25B/15B monthly, respectively). Over the last 4 weeks, balance sheet runoff has dropped the size of SOMA holdings by around $25B, again, mostly MBS. That slowdown in the pace, which is dependent on the schedule of maturing Treasuries, will only be temporary.
- Additionally there was no discernable change in takeup of the Fed's emergency lending programs, which are negligible at this point (discount window take up is just $3B, down $0.1B on the week).
Shifts in Fed liabilities show a $22B rise in reserves, bringing the 4-week net change to negative $104B - leaving them at a still "abundant" level (see next note).
- The pullback in reserves has come alongside a rise in the Treasury General Account offsetting declining usage of the overnight reverse repo facility.
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