Courtesy of the Atlanta Fed, below you can see what both sides of the Fed’s balance sheet currently look like. In light of Bernanke’s noncommittal speech, for now you can probably expect only gradual changes — not in size, obviously, but in composition — as MBS repay and the Fed reinvests into treasuries, a process that seems to have already started.
First the assets:
The Atlanta Fed comments on last week’s activity:
The biggest changes on the balance sheet came from MBS and Agency Securities, which together declined $8.6 billion. Other assets fell $6.7 billion. Treasuries increased by $2.5 billion.
Now the liabilities:
Bank reserve balances dropped by $16bn last week, a small amount given that banks hold more than $1 trillion of these at the Fed.
Separately, the Atlanta Fed also posted an update on the ABS market in the US, and it appears third quarter issuance is on pace to modestly outperform from the second quarter:
Of course, FinReg left in its wake a number of rules that regulators need to write and agree on, and it’s unclear exactly what ultimate effect they’ll have on the securitizaton market. In the meantime, although overall issuance remains low, spreads have been stable since the end of last year:
See more such chart porn here.
Related links:
Financial highlights – Atlanta Fed
Is this it, Ben? – FT Alphaville
Auto lobbying keeps on trucking – FT Alphaville