Federal Reserve Balance Sheet Update: Week of August 12, 2009

by: Tyler Durden

Total Federal Reserve balance sheet assets for the week of August 12 of $1,990 billion (an increase of $13 billion from the prior week) consisting of:

  • Securities held outright: $1,373 billion (an increase of $107 billion MoM, resulting from $43.7 billion in new Treasury purchases, $53.8 billion increase in MBS and $9.4 billion in Agency Debt), or $18.6 billion increase sequentially
  • Net borrowings: $340.5 billion (a decline of $47 billion month over month)
  • Float, liquidity swaps, Maiden Lane and other assets: $277 billion (another record decrease of $83.7 billion month over month due to a continued reduction in Central Bank Liquidity Swaps ($32 billion) and ($52) billion in CPFF outstandings).The rate of decline sequentially has, however, slowed dramatically and was just $5.6 billion lower than the prior week (after a $37.7 billion reduction in the prior week). It appears the Fed has reached the threshold in removing Swap and CPFF liquidity.
  • Foreign central bank liquidity swaps have hit another lowest level since the Lehman bankruptcy ($76.2 billion), athough the rate of sequential decline has slowed to a crawl. We would not be surprised if next week the Fed indicated more liquidity was being pumped into CB Swaps.

Foreign holdings of US Securities decreased for the first time in 5 months by $299 million sequentially (weekly) to $2,809.9 billion from $2,810.2 billion in the prior month. Keep in mind in the same time period the Fed purchased over $16.6 billion of Treasuries, indicating that in the last week the Fed was the only purchaser of Treasuries. In a normal environment this would be a very troubling development.

And to underscore that deflation still rules, The Federal Reserve's Monetary Base number of $1,643 billion was a decline of $31 billion MoM. Additionally Deposit Reserves were at $772.6 billion, a $33.2 billion decline MoM (hopefully this simply means that some banks have finally resorted to pushing excess reserves out of the basement and out the door).