The Fed reduced its Treasury holdings by $43.2 billion in the week-ended January 4th. The Fed’s Agency security holdings were unchanged. The Fed continues to shrink the money supply. Therefore, one should expect Treasury yields to move higher along the yield curve so long as the Fed continues to shrink the supply of money. The large banks will speak of tight money when they report earnings over the next several days.

• Treasuries: The Fed’s Treasury security holdings were $43.2 billion lower over the last week and $58.2 billion lower on a rolling 4-week total basis.
• Agencies: The Fed’s Government Agency security holdings were unchanged over the last week and $17.4 billion lower on a rolling 4-week total basis.
• The Fed’s balance sheet holdings: https://www.newyorkfed.org/markets/soma-holdings
• Excel file: Our Excel file detailing the Fed’s holdings of Treasury and Agency securities: HERE.

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