The Fed significantly trimmed its Treasury holdings during the week-ended January 18th while its Agency security holdings are essentially unchanged over the same period. The Fed has treated the U.S. housing market with kid gloves over the past month, certainly so since January 1st as its Agency security position is only $1.5 billion lower month-to-date. This largely explains why mortgage rates have come down since year-end. Conversely, we would expect Treasury yields to climb as we move through the first quarter of 2023.
- Treasuries: The Fed’s Treasury security holdings were $18.9 billion lower over the last week and $63.9 billion lower on a rolling 4-week total basis.
- Agencies: The Fed’s Government Agency security holdings were $1.5 billion lower over the last week and $13.3 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.