Monday, February 22, 2010

Fed MBS Purchases at $1.195T

As of last week, the current total of Agency MBS purchases by the NY Fed is at $1.195T. The Fed has stated that they will stop purchases at $1.250T and they are $55B away from that. Last week the FRBNY net purchased $11B of MBS so at that weekly rate, they will hit the $1.250T ceiling exactly in 5 more weeks (including this week).

At that point we may be entering into a brave new world, much different than the last 15 months, without the Fed purchasing on average $20B of financial assets per week using newly created reserve balances.

Below is a graph of the NY Fed's progress in this regard over the last 14 months.

2 comments:

Mike Norman said...

Yes, especially with the Treasury selling an average of $600 bln per month in securities over the past 5 months. At that rate it would take a month and a half to "drain" system reserves down to the level they were "pre-Lehman." Of course that doesn't take into account redemptions, but still!

MortgageAngel said...

Psyche! That's what I think. Planning for the worst but expecting and encore!