{"id":37465,"date":"2018-09-07T07:36:59","date_gmt":"2018-09-07T12:36:59","guid":{"rendered":"http:\/\/olduvai.ca\/?p=37465"},"modified":"2018-09-07T07:36:59","modified_gmt":"2018-09-07T12:36:59","slug":"the-feds-qe-unwind-hits-250-billion","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=37465","title":{"rendered":"The Fed\u2019s QE Unwind Hits $250 Billion"},"content":{"rendered":"
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The Fed\u2019s QE Unwind Hits $250 Billion<\/a><\/h3>\n<\/header>\n
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Here\u2019s my math when this \u201cbalance sheet normalization\u201d will end.<\/strong><\/p>\n

In August, the Federal Reserve was supposed to shed up to $24 billion in Treasury securities and up to $16 billion in Mortgage Backed Securities (MBS), for a total of $40 billion, according to its QE-unwind plan \u2013 or \u201cbalance sheet normalization.\u201d The QE unwind, which started in October 2017, is still in ramp-up mode, where the amounts increase each quarter (somewhat symmetrical to the QE declines during the \u201cTaper\u201d). The acceleration to the current pace occurred in July<\/a>. So how did it go in August?<\/p>\n

Treasury Securities<\/strong><\/p>\n

The Fed released its weekly balance sheet<\/a> Thursday afternoon. Over the period from August 2 through September 5, the balance of Treasury securities declined by $23.7 billion to $2,313 billion, the lowest since March 26, 2014. Since the beginning of the QE-Unwind, the Fed has shed $152 billion in Treasuries:<\/p>\n

\"\"<\/p>\n

The step-pattern of the QE unwind in the chart above is a consequence of how the Fed sheds Treasury securities: It doesn\u2019t sell them outright but allows them to \u201croll off\u201d when they mature; and they only mature mid-month or at the end of the month.<\/p>\n

<\/ins>On August 15, $23 billion in Treasuries matured. On August 31, $21 billion matured. In total, $44 billion matured during the month. The Fed replaced about $20 billion of them with new Treasury securities directly via its arrangement with the Treasury Department that cuts out Wall Street \u2013 the \u201cprimary dealers<\/a>\u201d with which the Fed normally does business. Those $20 billion in securities were \u201crolled over.\u201d<\/p>\n

But it did not replace about $24 billion of maturing Treasuries. They \u201crolled off\u201d and became part of the QE unwind.<\/p>\n

Mortgage-Backed Securities (MBS)<\/strong><\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The Fed\u2019s QE Unwind Hits $250 Billion Here\u2019s my math when this \u201cbalance sheet normalization\u201d will end. In August, the Federal Reserve was supposed to shed up to $24 billion in Treasury securities and up to $16 billion in Mortgage Backed Securities (MBS), for a total of $40 billion, according to its QE-unwind plan \u2013 […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[49,124,303,661,8701,662,8625,3650,4254,4255],"class_list":["post-37465","post","type-post","status-publish","format-standard","hentry","category-economics","tag-balance-sheet","tag-central-banks","tag-fed","tag-qe","tag-qt","tag-quantitative-easing","tag-quantitative-tightening","tag-us-federal-reserve","tag-wolf-richter","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/37465","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=37465"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/37465\/revisions"}],"predecessor-version":[{"id":37466,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/37465\/revisions\/37466"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=37465"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=37465"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=37465"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}