Fed Balance Sheet: No QT In Mortgage Backed Securities, The Position Is UP For The Latest Reporting Week

On June 2, the day after the purported beginning of Quantitative Tightening the MBS position was reported as $2.707 trillion. On September 22 the week-ended Sep. 21 position was $2.714 trillion.

The expected (idealized, maturities are lumpy) reduction in the Agency paper was $17.5 billion per month, $52.5 billion for the first three months of QT, kicking up to $35 billion per month (~$1.1 billion per day) starting on September 1. But rather than the idealized $75.6 billion reduction, the position is actually $7 billion larger than the day QT supposedly started. Here are the largest, by far, line items in the most recent report:

1. Factors Affecting Reserve Balances of Depository Institutions

Millions of dollars

Reserve Bank credit, related items, and reserve balances of depository institutions at Federal Reserve Banks	Averages of daily figures			Wednesday Sep 21, 2022
	Week ended Sep 21, 2022	Change from week ended
		Sep 14, 2022	Sep 22, 2021
Reserve Bank credit	8,783,769	-    4,962	+  345,397	8,781,996
Securities held outright1	8,393,103	-    7,668	+  454,162	8,391,153
U.S. Treasury securities	5,674,858	-   12,956	+  266,539	5,673,919
Bills2	315,726	-    3,156	-   10,318	314,792
Notes and bonds, nominal2	4,883,288	-    9,786	+  225,011	4,883,288
Notes and bonds, inflation-indexed2	375,761	0	+   15,180	375,761
Inflation compensation3	100,083	-       13	+   36,666	100,078
Federal agency debt securities2	2,347	0	0	2,347
Mortgage-backed securities4	2,715,898	+    5,287	+  187,623	2,714,887

 

....MUCH MORE

I said last week that if we saw another increase in this (current) H.4.1 report that I would:

There are a couple reasons to think next week's report might show the Fed picking-up the pace but if it doesn't happen, large-x-large, we'll have to conclude that, in the words of the philosopher (Phil Collins anyway):

...Well, I was there and I saw what you did
I saw it with my own two eyes
So you can wipe off the grin
I know where you've been, it's all been a pack of lies

That's right, I threatened to start singing "Hold on" by Genesis.

We already know the Fed and its Chairman are liars, since January 2021 they were saying inflation was transitory while looking at this, via TradingEconomics (also on blogroll at right):

source: tradingeconomics.com

Inflation was not only increasing but increasing fast and has now been above 8% for six consecutive months. Add another 4% or so to make the housing component comparable to the late 1970's methodology and this is unprecedented.

And all the while the Fed knew what was happening and obfuscated, dissimulated and flat-out lied. The question becomes why.?

More tomorrow but as a teaser, ignore all the complaints about the Fed making a policy error by raising rates.

It's not an error, it's deliberate and just as the Fed desired inflation and achieved it, they desire recession and will achieve it as well.

And it won't be due to an "error."

And should the Fed, having stalled on the reduction in the housing paper, actually begin shrinking the position the effect will be like springing the trap at a hanging for the unwary.

If interested see also: "The Fed, QT, And The Coming Housing Bubble Disaster"