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Saturday, February 27, 2010

Fed Balance Sheet and MBS Purchases

by Calculated Risk on 2/27/2010 11:49:00 PM

Here is the Federal Reserve balance sheet break down from the Atlanta Fed weekly Financial Highlights:

Fed MBS Purchases Graph Source: Altanta Fed.

From the Atlanta Fed:

The balance sheet expanded $20 billion, to $2.3 trillion, for the week ended February 17.

  • Holdings of agency debt and mortgage backed securities increased $49 billion while short-term lending to financials, specifically the Term Auction Credit Facility, declined by $23 billion.

  • The balance sheet is expected to peak during the first half of this year after the MBS purchase program is completed and purchases settle on the balance sheet.
  • Note that some of the MBS purchases have not "settled on the balance sheet" yet.

    The NY Fed has purchased $1.21 trillion net in agency MBS as of Feb 24th, but the Fed's balance sheet only shows $1.03 trillion in MBS assets. It takes some time for the purchases to settle, and this has confused some people. The NY Fed number is the one to follow - and no one should be surprised that the Fed's balance sheet continues to expand after the MBS purchase program ends on March 31st.