Changes on the asset side of the Fed’s balance sheet – the $42-billion drop in May – also reflect the Fed’s other activities. But in terms of Treasuries and MBS, the Fed shed billion in May.
Let’s suppose the Fed had maintained a 5%/year growth path in nominal GDP. The FFR would not have declined to 0.25% but rather more likely be around 3%. They are paying a few billion dollars/year in interest on excess reserves to prevent the money they created to buy MBS.
At the time I wasn’t too fussed about the action as reducing a .4 trillion balance sheet by $10 billion a month didn’t seem all that important. But $10 billion is just a start. The Fed’s goal is to eventually reach $50 billion a month, with the program ending in 2020 having hopefully shrunk the balance sheet to $3 trillion.
Swiss ditch Libor as rate reference The LIBOR interest rates are being used as a reference rate for a lot of financial products, for example derivatives like swaps. A lot of banks use the LIBOR interest rates also to determine their rates on products like mortgages, savings accounts and loans. Current US dollar libor interest rates:
Total assets fell by $42 billion in May, as of the balance sheet for the week ended June 5, released this afternoon. This was the balance-sheet week that included May 31, the date when Treasuries rolled off. This drop reduced the assets to $3,848 billion, the lowest since October 2013.
Fed Balance Sheet Drops by $42 Billion in May, Sheds MBS at Fastest Pace, Starts the Reverse of Operation Twist 06-07 wolfstreet.com May was the first month of the Fed’s new plan of slowing QT and altering it in other ways.
Bradenton-Sarasota foreclosure rate continues to fall The foreclosure rate for North Port-Sarasota-Bradenton decreased significantly in December over the same period from 2013, according to a new report. The report, from Irvine, Calif.-based real estate data firm corelogic, shows the rate of North Port-Sarasota-Bradenton area foreclosures among outstanding mortgage loans was 3.08% for December 2014.
This drop reduced the assets to $3,848 billion, the lowest since October 2013. Since the beginning of the "balance sheet normalization" process, the Fed has shed $613 billion. Since peak-QE in January 2015, the Fed has shed $669 billion: In May, the balance of MBS fell by $20 billion to $1,555 billion.
· This may seem like something only a dirty rotten scoundrel would do. But I can imagine that things play out in a way that even the best of them end up doing this. 4. On the other hand, you may be sitting on essentially worthless shares for up to 6 months, hoping everything turns out in your favor once the BIS freegold market opens for business.
Richard Quest, CNN Money Editor-at-large : What is Davos? Jan 18, 2018 – Richard Quest, CNN Money Editor-at-large explains why this years Davos 2018 is certainly one to remember