Total assets: https://fred.stlouisfed.org/series/WALCL $8.9t
MBS: https://fred.stlouisfed.org/series/WSHOMCB $2.7t
Treasury securities: https://fred.stlouisfed.org/series/WSHOTSL $5.7t
Reverse repurchase agreements? (this one could be wrong/misleading?) https://fred.stlouisfed.org/series/WLRRAL: $2.2t
The Fed had to end its first QT program in September 2019 after the declining size of its balance sheet contributed to a crisis in overnight lending markets.
Come September, the Fed will be cutting $95 billion a month from its holdings, split between $60 billion of Treasuries and $35 billion of MBS.
That is roughly double the maximum pace of $50 billion a month targeted in the 2017-2019 cycle. Back then, the split was $30 billion of Treasuries and $20 billion of MBS.
When the Fed kicked off its first-ever QT undertaking, its total balance sheet was around $4.5 trillion in size. In nearly two years of QT, it managed to bring that down by about $650 billion to a bit over $3.8 trillion before it brought the program to a stop.
This time, the annualized monthly rate of reduction works out to more than $1.1 trillion a year in balance sheet roll-offs once it attains its maximum pace. That means it will likely surpass the total of the entire 2017-2019 QT cycle by early 2023. Many economists see officials targeting about $3 trillion in total balance sheet shrinkage over a three-year span.
https://www.reuters.com/business/feds-qt-plan-then-now-2022-04-06/
Currently at about $9t, planning on getting rid of $3t (that's 3 years of QT... are the markets really trusting the fed at their word and pricing that in? which sectors are actually affected by QT, directly and indirectly?)
What are the chances the Fed's balance sheet ends up $6t by 2025-2026? If the government keeps spending more than they collect on taxes, they are going to keep issuing bonds to borrow money to create money to spend. What % of those bonds will the Fed purchase/hold? 0? They're going to unwind $1t a year at the same time the government needs to borrow roughly $1t a year deficit wise? If I am wrong on this, please teach me.
At the end of July 2021, 53% of federal debt was owned by investors from the United States, including the Federal Reserve.
Submitted May 31, 2022 at 10:34PM by waltwhitman83 https://ift.tt/KmBVR2l
