Federal Reserve Increased Balance Sheet Last Week by $0.02B, MBS by $2.2B

The Federal Reserve added $0.019 billion of U.S. Treasuries last week and $2.2 billion in MBS. The Federal Reserve is currently reducing the balance sheet by $30 billion per month. The total reduction through April 18 is $14.0 billion. The last chart shows the weekly change in the Fed's balance sheet (ended Wednesday) against the weekly change in the S&P 500 Index (ended Wednesday). If there's some correlation there, the market could be headed lower in the next week as the Fed will likely reduce its balance sheet to stay on schedule. The Fed is not reducing its balance sheet like clockwork. It took very little off in March after more than needed in January and February, finishing the quarter down $56 billion. This quarter they must reduce by $90 billion, thus far down only $6.3 billion.

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