2018-08-03

Federal Reserve Reduces Balance Sheet By $22 B, All Treasuries

The Federal Reserve reduced its balance sheet by $22 billion last week, of which $23 billion was treasuries (MBS increased by $1 billion).

The S&P 500 Index declined by 33 points on the week.

The Federal Reserve eliminated all but $1.9 billion of its $40 billion target for July. It now has $41.9 billion to reduce over 4 weeks in August. There are two big treasury maturity dates in August, one on August 15 and one on August 31, both above $20 billion. September has only one on September 30. The Fed is likely to use that August 15 for this month and the August 31 for September, but we'll see in two weeks. The Fed must reduce treasuries by $26.7 billion in August to stay on pace.

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