From Wolf Street, July 9:
OK, this balance-sheet shrinkage, now in its fourth week, is going faster than I’d expected. Total assets on the Fed’s balance sheet for the week ended July 8, released this afternoon, dropped by -$85 billion, the fourth week in a row of declines. This brought the four-week total drop to -$248 billion:
Back on April 9, when markets were just emerging from chaos after the Fed had thrown $1.5 trillion at them in the span of four weeks, Fed Chair Jerome Powell said in a webinar at Brookings that “when private markets are once again able to perform their vital functions of channeling credit and supporting economic growth, we will put these emergency tools away.”
This matched what he and other Fed officials had said in the year or so before the Crisis, that at the “next crisis,” they would throw all the Fed’s might at the problem up front, and then they’d back off, rather than let QE drag on for years. And they did.
By peak-QE in early June, the Fed had increased its assets by $2.86 trillion. It has since then whittled this increase down by $248 billion. Note the systematic front-loading then tapering the asset purchases and letting assets top out at $7.16 trillion, and then letting them decline, now down to $6.92 trillion:
Assets by category........MUCH MORE
