Expansive buying of Treasurys and Agency MBS have pushed the size of the Fed’s holdings of securities back above $4 trillion for the first time since September 2018. Aggressive purchases mean that the careful process of balance sheet normalization begun two-and-a-half years ago is quickly being erased.
The Fed’s holdings of Treasurys and MBS rose $258.4 billion to a Wednesday average of $4.187 trillion in the week ended March 25. The total for Treasury bills was up $5.0 billion to $326.0 billion, total Treasury notes and bonds were up $252.2 billion to $2.487 trillion, and MBS was up $1.2 billion to $1.372 trillion.
The goal of getting the balance sheet back to Treasurys only has gone by the wayside for now. However, the share of holdings in Treasurys is now up to 67%, the highest since the end of the first three large scale asset purchase programs in November 2014.
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