Mystery Of The Increasing Fed Balance Sheet – RISES By $705 Million (A Hardy Boys Novel)

by Anthony B Sanders
The Federal Reserve of New York just released their weekly System Open Market Account Holdings report. The Federal Reserve Balance Sheet actually grew by $705 million (rather than shrink as Janet Yellen indicated a few months ago).

What is The Fed shrinking? That is the mystery worthy of the Hardy Boys.
 

It turns out that The Fed didn’t shrink Treasury Notes and Bonds or Floating Rate Notes or TIPs or Federal Agency Securities. They DID increase Agency MBS holdings by $705 million.
This is now several weeks since The Fed actually sold assets off its balance sheet and the 10 year skyrocket!!

The Fed had better tread carefully in terms of further rate increases and balance sheet unwinding. Otherwise, the Hardy Boys will have to be called to solve another mystery!