Federal Reserve balance sheet rises to record $5.86T
The Federal Reserve increased its balance sheet to $5.86 trillion this week as a way to keep the economy running amid the coronavirus outbreak. Yahoo Finance’s Alexis Christoforous, Brian Sozzi and Brian Cheung break down the details.
Video Transcript
BRIAN SOZZI: Want to bring in Brian Cheung. Brian Cheung, not a good month for jobs. But interesting to see, I guess unsurprisingly, the Federal Reserve, their balance sheet has swelled to a record. My question is, does it even matter at this point? They're going to do whatever they can to save the economy.
BRIAN CHEUNG: Yeah, well, the Federal Reserve has been pretty clear on its intentions with its strategy to battle the economic impacts of the coronavirus. Over the past four weeks, it's slashed rates to zero and launched a quantitative easing program with seemingly no cap. And because of that, the Federal Reserve's asset holdings have ballooned over the past few weeks. Right now, the total balance sheet total is-- get this-- $5.8 trillion.
For reference, it actually peaked. The largest it's ever been prior to that was only $4.5 trillion after the financial crisis. It was trying to unwind that until the coronavirus issues started to flare up, after which they began buying all different types of purchases-- treasury bills across duration, agency mortgage-backed securities, and now for the first time, agency commercial backed securities. Brian, just over yesterday, they bought $60 billion in one single day of Treasury bills.
Week over week, when you compare this Wednesday to last Wednesday, it actually expanded the balance sheet by a total of $600 billion. So at this pace, the Federal Reserve is really set to actually almost double its balance sheet over the next month or so. So something definitely worth watching as the Federal Reserve continues to absorb assets to try to make sure that they don't see any sort of financial strains as the coronavirus economic impact continues to grip the nation. Brian.
