This Curve Will Never Flatten Again: Fed Balance Sheet Hits $6.1 Trillion, Up $2 Trillion In 1 Month
Here is an example of a curve that everyone wants to flatten.
And here is an example of a curve that while some – namely the bears – also wants to see collapse, it will never do so as that would mean the end of western civilization – which is now entirely contingent on the level of the S&P500 – as we know it. We are talking of course, about the Fed balance sheet which is now well above $6 trillion to make sure stocks and bonds don’t crash.
With that in mind here is all you need to know about this particular “curve”:
Total Fed assets grew by $293Bn to $6.08 trillion as of close, April 8, with the increase primarily driven by $294bn of Treasury securities added to the SOMA portfolio. Through its credit facilities, the Fed also extended $680bn in temporary liquidity to various counterparties, a decline of $61bn from last week.
In the past month, the Fed balance sheet has increased by $2 trillion, more than all of QE3, when the balance sheet increased by $1.7 trillion over the span of a year. The balance sheet increase has also been faster on a weekly basis than anything observed during the financial crisis, increasing as follows:
- April 8: $$272BN
- April 1: $557BN
- March 25: $586BN
- March 17:$356BN
Since the Fed needs to monetize all debt issuance this year, and probably every other year now that the Treasury and Fed have merged and helicopter money has arrived, the pace of the current QE is like nothing ever observed before:
And since we know what the Fed’s POMO schedule is for next week: an increase of $225BN in TSYs and MBS…
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