Friday, January 15, 2010


Fed Balance Sheet Breaks Record

According to Reuters:
NEW YORK, Jan 14 (Reuters) - The U.S. Federal Reserve's balance sheet rose to a record in the latest week, boosted by its ongoing efforts to support the mortgage market, Fed data released on Thursday showed.

The Fed's balance sheet -- a broad gauge of its lending to the financial system -- rose to $2.274 trillion in the week ended Jan. 13 from 2.216 trillion in the prior week.

After declining early last year, the balance sheet generally has been accumulating mass amid the Fed's asset-buying program, in which the central bank's holdings of agency debt and mortgage-backed securities have grown to more than $1 trillion.

The latest rise in the balance sheet came on the back of a jump in its holdings of agency mortgage-backed securities, which rose to $968.59 billion in the week ended Jan. 13 from $908.74 billion in the previous week.

The Fed's holdings of agency debt totaled $160.83 billion in the week ended Jan. 13 versus $159.88 billion the previous week.

By the end of March, the Fed plans to have bought $1.25 trillion worth of mortgage-backed securities and about $175 billion worth of agency debt.

What is agency debt?

How will the fed get rid of $1.25 trillion worth of mortgage backed securities?
Agency debt includes bonds issued by Freddie Mac and Fannie Mae. I'm not sure if it includes other "agencies'" bonds.
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