May 29, 2020 - Economy

The Fed's balance sheet tops $7 trillion

Data: Federal Reserve Bank of St. Louis; Chart: Axios Visuals
Data: Federal Reserve Bank of St. Louis; Chart: Axios Visuals

The Fed's balance sheet rose to $7.1 trillion as of this week, having now committed a record $2.2 trillion in quantitative easing purchases since chair Jerome Powell's pledge to buy unlimited Treasury bonds and mortgage-backed securities in March.

Watch this space: The massive increase comes despite the fact that many of the central bank's special purpose vehicles set up to buy corporate bonds and loan to businesses are not yet operational.

Details: The Fed's Secondary Market Corporate Credit Facility has so far purchased only investment grade bond ETFs, with holdings rising to $3 billion this week from $1.8 billion last week.

  • The Commercial Paper Funding Facility usage rose to $4.3 billion from $4 billion.

What's next: Goldman Sachs analysts expect the Fed to soon move to "a steady pace" of roughly $80 billion to $120 billion of Treasuries and $25 billion to $35 billion of MBS purchases per month, as well as instituting yield curve control for shorted-dated Treasuries.

Go deeper: The Fed's coronavirus response could have unintended results

Editor’s note: This piece was corrected to show that the Fed bought $3 billion in the Secondary Market Corporate Credit Facility (not $35 billion) and that Commercial Paper Funding Facility usage rose to $4.3 billion (not $13 billion). The $35 billion number earlier quoted from TD Securities reflects the Treasury Department’s investment in the facilities, rather than the Fed's purchases, according to a Federal Reserve spokesman.

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