Largest Increase In Federal Reserves Since May 2015 Ahead Of FOMC Meeting

| About: SPDR S&P (SPY)
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Summary

Federal Reserve balances helped boost markets since 2008.

Week to week changes also move markets up and down.

We saw the biggest move up in Fed balances in a while.

That should support markets or send them higher.

We've been tracking the Fed's moves. They have a $4T portfolio after quantitative easing. We just saw the biggest increase in reserves since May 2015. Just as we've shown declines in Fed Reserves cause risk to markets a build up in reserves supports markets. That may give added cushion to markets into their FOMC decision tomorrow.

Let's see the changes in Federal Reserves

Balances Week Chg YTD Chg
2016-07-13 4213862766647.87 0.00% -0.27%
2016-07-20 4225546202408.16 0.28% 0.00%
2016-07-27 4209382864330.18 -0.38% -0.38%
2016-08-03 4209395820560.10 0.00% -0.38%
2016-08-10 4209400820518.78 0.00% -0.38%
2016-08-17 4222046297752.82 0.30% -0.08%
2016-08-24 4227711875610.08 0.13% 0.06%
2016-08-31 4212673983393.06 -0.36% -0.30%
2016-09-07 4212675983165.18 0.00% -0.30%
2016-09-14 4232164926101.79 0.46% 0.16%

Source: New York Federal Reserve: SOMA

Federal Reserve balances are the highest they've been since April.

Let's look at the chart of Federal Reserves

You can see above the Federal Reserve balances have moved up to make recent highs.

Let's Look At The S&P 500 ETF (NYSEARCA:SPY)

The two dates on the chart show the last times that Fed Reserve balances were up this much on a week-to-week basis. Such a large week-to-week increase has not happened so often. Both times followed with a nice bounce in stocks.

We've shown many times that when Fed balances change up or down the market usually responds in the same direction in the next week or two.

We'll show recent results at the end of this report.

Conclusion

Even though we are ahead of a big event Wednesday the Fed bought a large amount of securities. It's no mystery that quantitative easing assets have helped support the market. Even week-to-week movements have sent the market up or down the following week or two. Last week saw the third largest move up in more than a year. We'd expect that to help markets hold and go higher.

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Here you'll see Fed moves (right side) lead the SPY moves (left side) that week or the next two weeks.

SPY WkWk Fed WkWk
1/12/2015 201.63 -1.3% 208.25 0.4%
1/20/2015 204.97 1.7% 208.14 -0.1%
1/26/2015 199.45 -2.7% 207.55 -0.3%
2/2/2015 205.55 3.1% 207.55 0.0%
2/9/2015 209.78 2.1% 207.52 0.0%
2/17/2015 211.24 0.7% 208.03 0.2%
2/23/2015 210.66 -0.3% 207.59 -0.2%
3/2/2015 207.50 -1.5% 207.60 0.0%
3/9/2015 205.83 -0.8% 207.60 0.0%
3/16/2015 210.41 2.2% 207.88 0.1%
3/23/2015 205.74 -2.2% 207.19 -0.3%
3/30/2015 206.44 0.3% 207.19 0.0%
4/6/2015 210.04 1.7% 207.19 0.0%
4/13/2015 207.95 -1.0% 207.26 0.0%
4/20/2015 211.65 1.8% 207.39 0.1%
4/27/2015 210.72 -0.4% 206.50 -0.4%
5/4/2015 211.62 0.4% 206.50 0.0%
5/11/2015 212.44 0.4% 207.72 0.6%
5/18/2015 212.99 0.3% 207.41 -0.2%
5/26/2015 211.14 -0.9% 206.67 -0.4%
6/1/2015 209.77 -0.6% 206.67 0.0%
6/8/2015 210.01 0.1% 206.67 0.0%
6/15/2015 210.81 0.4% 207.58 0.4%
6/22/2015 209.82 -0.5% 207.85 0.1%
6/29/2015 207.32 -1.2% 207.15 -0.3%
7/6/2015 207.48 0.1% 207.15 0.0%
7/13/2015 212.47 2.4% 207.72 0.3%
7/20/2015 208.00 -2.1% 207.96 0.1%
7/27/2015 210.50 1.2% 207.24 -0.3%
8/3/2015 207.95 -1.2% 207.24 0.0%
8/10/2015 209.42 0.7% 207.24 0.0%
8/17/2015 197.83 -5.5% 207.89 0.3%
8/24/2015 199.28 0.7% 207.33 -0.3%
8/31/2015 192.59 -3.4% 207.33 0.0%
9/8/2015 196.74 2.2% 207.33 0.0%
9/14/2015 195.45 -0.7% 207.75 0.2%
9/21/2015 192.87 -1.3% 208.12 0.2%
9/28/2015 195.00 1.1% 207.56 -0.3%
10/5/2015 201.33 3.2% 207.56 0.0%
10/12/2015 203.27 1.0% 208.31 0.4%
10/19/2015 207.51 2.1% 208.20 -0.1%
10/26/2015 207.93 0.2% 207.65 -0.3%
11/2/2015 210.04 1.0% 207.65 0.0%
11/9/2015 202.54 -3.6% 207.65 0.0%
11/16/2015 209.31 3.3% 208.05 0.2%
11/23/2015 209.56 0.1% 207.63 -0.2%
11/30/2015 209.62 0.0% 207.63 0.0%
12/7/2015 201.88 -3.7% 207.63 0.0%
12/14/2015 200.02 -0.9% 208.04 0.2%
12/21/2015 205.68 2.8% 208.26 0.1%
12/28/2015 203.87 -0.9% 207.76 -0.2%
1/4/2016 191.92 -5.9% 207.76 0.0%
1/11/2016 187.81 -2.1% 208.40 0.3%
1/19/2016 190.52 1.4% 207.82 -0.3%
1/25/2016 193.72 1.7% 207.52 -0.1%
2/1/2016 187.95 -3.0% 207.52 0.0%
2/8/2016 186.63 -0.7% 207.52 0.0%
2/16/2016 192.00 2.9% 208.14 0.3%
2/22/2016 195.09 1.6% 208.35 0.1%
2/29/2016 200.43 2.7% 207.90 -0.2%
3/7/2016 202.76 1.2% 207.90 0.0%
3/14/2016 204.38 0.8% 208.11 0.1%
3/21/2016 203.12 -0.6% 208.35 0.1%
3/28/2016 206.92 1.9% 207.86 -0.2%
4/4/2016 204.50 -1.2% 207.86 0.0%
4/11/2016 207.78 1.6% 208.50 0.3%
4/18/2016 208.97 0.6% 208.08 -0.2%
4/25/2016 206.33 -1.3% 207.35 -0.3%
5/2/2016 205.72 -0.3% 207.35 0.0%
5/9/2016 204.76 -0.5% 207.35 0.0%
5/16/2016 205.49 0.4% 207.74 0.2%
5/23/2016 210.24 2.3% 207.16 -0.3%
5/31/2016 210.28 0.0% 207.16 0.0%
6/6/2016 210.07 -0.1% 207.16 0.0%
6/13/2016 206.52 -1.7% 207.56 0.2%
2016-06-22 208.10 0.8% 207.92 0.2%
2016-06-29 206.66 -0.7% 207.18 -0.4%
2016-07-06 209.66 1.5% 207.18 0.0%
2016-07-13 214.92 2.5% 207.18 0.0%
2016-07-20 218.09 1.5% 207.76 0.3%
2016-07-27 216.52 -0.7% 206.96 -0.4%
2016-08-03 216.18 -0.2% 206.96 0.0%
2016-08-10 217.14 0.4% 206.96 0.0%
2016-08-17 218.35 0.6% 207.58 0.3%
2016-08-24 217.85 -0.2% 207.86 0.1%
2016-08-31 217.38 -0.2% 207.12 -0.4%
2016-09-07 219.01 0.7% 207.12 0.0%
2016-09-14 213.15 -2.7% 208.08 0.5%
2016-09-21 ?

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