Federal Reserve Increases Balance Sheet $1.4 Billion

Total assets rose $1.4 billion last week, mostly MBS. This bumps up the remainder for July to $37.5 billion. The Fed now has three weeks in which to reduce this total. The Fed reduced about this much in the three weeks from June 13 to July 4.

The S&P 500 Index has not been following the change in the balance sheet over the past couple of months, but the weekly correlation has revived. This week saw a 61 point increase in the S&P 500 Index. Several large weekly rises coincide with the Federal Reserve's balance sheet increasing on the week.
The Chinese yuan continues to decline, but the correlation here isn't a tight one, it is one of phase changes. The yuan rose during QE, went sideways for most of the time the Fed's balance sheet went sideways, started falling before QE ended and started falling again as the balance sheet reductions picked up in 2018. I'm not positing a tight correlation, more so synchronous movements in the global economy and global financial system.

No comments:

Post a Comment