Tuesday, May 26, 2009

A Look At The Federal Reserve's Balance Sheet

Always good to keep things in perspective. The most recent Fed Balance Sheet reading of $2.16 trillion is a doozy and is only getting higher, and a couple hundred bucks away from the highest ever recorded of $2.17 trillion a month ago. This is just the beginning: Bernanke at Co. have committed to monetizing $1.75 trillion of securities this year, of which $1.21 trillion remain to be purchased still. This means that the chart will likely pass the $3 trillion mark at some point over the next 3-6 months. As to the yield on these securities once the total is over $3 trillion, if the current trendline of UST pounding is any indication, look for something north of 5%.

Just as a reminder, the total foreign central bank holdings of Treasuries and Agencies is $2.7 trillion.

Very soon America's largest creditor will be... America.

Source: Federal Reserve H.3 and H.4.1 releases.
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