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Comment: Fed’s holdings of securities climb to nearly $5.7 trillion as of May 13 week average

The Fed’s holdings of Treasurys and Agency MBS continue to climb to record highs even as the pace of purchases is easing up. The Fed’s holdings of securities were up $67.5 billion in the May 13 week to $5.673 trillion, another record that will continue to be broken until the immediate need to support markets has resolved. There may be more purchases later to provide stimulus to the economy, but at present policymakers are focusing on addressing the crisis, not a recovery which has yet to begin.

The Fed bought $41.6 billion in Treasury notes and bonds as of the Wednesday average on May 13. This was the smallest purchase since $33.9 in the March 18 week. The Fed now holds a total of $4.040 trillion in Treasury bills, notes, and bonds.

Purchases of Agency MBS were up $25.9 billion in the May 13 week, the smallest buy since $17.5 in the April 15 week. Holdings of MBS total $1.631 trillion. Holdings of Agency remained at $2.3 billion.

Borrowing at the discount window has eased to a level of $24.9 billion in the May 13 data, its lowest level since $14.4 billion in the March 25 week. Use of central bank swap lines was not much changed at $442.8 billion in the May 13 week. Use of repo and reverse repo operations are not showing more than normal week-to-week fluctuations. Use will probably pick up toward month end, as usual.

The Fed is reporting amounts lent via credit facilities which gives an indication where demand lies. One thing is clear – the Paycheck Protection Program is getting a workout and its expansion saw extensive use.

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