the fed the fed the fed

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AN UPDATE ON THE FED BALANCE SHEET. BY JONATHAN BRICE THE FED THE FED THE FED

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THE FED THE FED THE FED. An update on the Fed Balance Sheet. By Jonathan Brice. Agenda. What is a balance sheet? Current makeup of the Fed Balance sheet Recent Trends Outlook Run for the hills?. Balance Sheet. A summary of the financial balances of the Fed. - PowerPoint PPT Presentation

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Page 1: THE FED  THE FED THE FED

AN UPDATE ON THE FED BALANCE SHEET.BY JONATHAN BRICE

THE FED THE FED THE FED

Page 2: THE FED  THE FED THE FED

Agenda

What is a balance sheet?Current makeup of the Fed Balance sheetRecent TrendsOutlookRun for the hills?

Page 3: THE FED  THE FED THE FED

Balance Sheet

A summary of the financial balances of the Fed.

Lists the Fed’s current Assets and Liabilities For typical firm it would list A =L+OE, for the Fed it

lists A=L+ Capital AccountsOriginal report contains 12 sections Released every Thursday afternoon around

4:30 p.m.

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Largest Assets: Securities,

repurchase agreements, and etc (91%)

The Fed (typically) makes billions of dollars on these assets

Smallest Assets: CB Liquidity swaps

(0%) Repurchase

Agreements (0%)

Current Assets (March 25 release)

Page 5: THE FED  THE FED THE FED

Current Liabilities

Largest Liabilities: Depository

Institutions (51%) Fed Notes (39%)

Page 6: THE FED  THE FED THE FED

Asset Trends

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Selected Asset Trends

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Fed Liquidity Facilities

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Fed Institutional Supports

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Selected Fed Liabilities

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Summary of the Evolution

Phase1 : Efforts to provide short-term funding to the markets (Foreign-Exchange Swaps)

Phase 2: As the liquidity facilities wound down, the BS shifter towards the assets acquired under large scale asset purchase programs (MBS) $1.8 trillion of Treasury, agency and mortgage-backed

securities

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Outlook: Phase 3

The Fed will finish their purchase of MBS this week

The Fed has tapered off purchases as programs approach their end, in order to help mitigate any possible adverse reactions

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Potential Risk

The banking system currently has more than $1 trillion in reserves

The Fed must implement a strategy to successful shore up liquidity

Inflation?