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Comment: Fed’s holdings of securities top $5 trillion in April 15 week

The Fed’s average holdings of US Treasurys, Agencys, and Agency MBS reached nearly $5.2 trillion in the week ended Wednesday, April 15. Purchases of Treasury notes and bonds were up $206.3 billion to nearly $3.4 trillion and Agency MBS was up $17.5 billion to a little below $1.5 trillion. Overall the balance sheet holdings were up $223.8 billion week-over-week.

The proportion of holdings of Treasurys relative to Agencys and MBS rose to 72% in the week, while buys of Treasurys outpace the Agency debt.

Now that the calendar has crossed the end of month and quarter on March 31, use of repo and reserve repo facilities has declined.  Central banks’ sue of swap lines rose slightly in the week, but it appears that the need for dollar funding is being met and the use of swap lines is leveling off. Federal  agencies have encouraged those eligible to borrow at the discount window to do so if needed, and even if not needed to reduce the stigma of having to turn to the lender of last resort. Financial institutions are doing so.

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