The Fed has to ramp up QT or stop pretending that it is tightening in a meaningful way. The Fed added $4.8 Trillion to its balance sheet over a two year period and the 7% reduction that has occurred over the past 15-16 months is a drop in the QT bucket. There remains far too much excess in the system. Look no further than the AI bubble. When investors readily accept 20-30x Revenue multiples, nevermind EBITDA multiples, it is a sign that too much slack exists in the system. This Fed has failed.

• Treasuries: The Fed’s Treasury security holdings decreased by $1.2 billion for the week-ended June 28th and decreased by $21.4 billion on a rolling 4-week basis.
• Agencies: The Fed’s Government Agency security holdings decreased by $15.2 billion over the same period and decreased by $20.1 billion on a rolling 4-week 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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