--- title: "The main situation of the Federal Reserve's balance sheet" type: "Topics" locale: "zh-CN" url: "https://longbridge.com/zh-CN/topics/29016549.md" description: "Foreword, while looking at US macroeconomic data, I also checked the balance sheet of the FED. Personally, I think there will definitely be a rate cut in June, and the Fed has basically prepared on the balance sheet. You can see the conclusion in the last paragraph. Of course, I'm not a financial expert, just a businessman, so my judgment is from a business perspective. The FED, as an institution that makes a living by selling dollars, is now losing money. This situation is unsustainable, and the reason for the loss is that interest rates are too high. See below for details..." datetime: "2025-04-18T02:36:09.000Z" locales: - [en](https://longbridge.com/en/topics/29016549.md) - [zh-CN](https://longbridge.com/zh-CN/topics/29016549.md) - [zh-HK](https://longbridge.com/zh-HK/topics/29016549.md) author: "[老板的老板 AI Exec](https://longbridge.com/zh-CN/profiles/123.md)" --- > 支持的语言: [English](https://longbridge.com/en/topics/29016549.md) | [繁體中文](https://longbridge.com/zh-HK/topics/29016549.md) # The main situation of the Federal Reserve's balance sheet Foreword: While reviewing US macroeconomic data, I also checked the FED's balance sheet. Personally, I believe a rate cut in June is inevitable, and the Fed has basically prepared its balance sheet for it. See the conclusion in the final section. Of course, I'm not an economist—just a businessman—so my judgment comes from a business perspective: The FED, as an institution that profits from selling dollars, is now operating at a loss. This is unsustainable, and the reason for the loss is simply that interest rates are too high. Details below. * * * Quantitative tightening (QT) over the past 18 months has gradually reduced the Fed's balance sheet from its 2022 peak of approximately $9 trillion to **$6.73 trillion (as of Wednesday, April 16, 2025)**, with about 95% of assets still in long-term securities (US Treasuries and agency MBS). The latest H.4.1 weekly report shows that assets are primarily structured in three tiers: "Securities—Monetary Policy Tools—Liquidity Tools," while liabilities are dominated by four categories: "Currency in Circulation—Bank Reserves—RRP—Treasury Deposits." The following sections break down assets, liabilities, trends, and policy. ## 1 Asset Overview Asset Item Balance ($Barrick Mining(B.US)arrick Mining(B.US)) % of Total Assets Weekly Change Annual Change \* Key Components **Total Securities** **6,408.5** 95.3% \-0.4 \-540.6 Comprises the following three items [Home](https://www.federalreserve.gov/releases/h41/current/h41.pdf) • US Treasuries 4,217.3 62.7% \-0.3 \-341.2 Bills 195B, Par Notes/Bonds 3,601B, TIPS 312B, Inflation Compensation 108B • Agency MBS 2,188.9 32.5% \-0.05 \-199.3 Fannie Mae / Freddie Mac / GNMA-guaranteed MBS • Agency Bonds 2.35 <0.1% 0 0 Only two legacy bonds remain **Net Premium/Discount** 218.6 3.2% \-0.3 \-26.7 Amortized difference between purchase price and face value [Home](https://www.federalreserve.gov/releases/h41/current/h41.pdf) **Repo Agreements** 0.003 <0.01% +0.7 +0.7 Only sporadic external demand [Home](https://www.federalreserve.gov/releases/h41/current/h41.pdf) **Loans** 4.54 0.07% +0.4 \-130.2 Mainly **Discount Window (2.71B)** and **PPPLF Residuals (1.82B)**; BTFP cleared to 0 this week [Home](https://www.federalreserve.gov/releases/h41/current/h41.pdf)[Home](https://www.federalreserve.gov/financial-stability/bank-term-funding-program.htm?utm_source=chatgpt.com) **Main Street Program** 7.06 0.10% \-0.06 \-7.38 Legacy assets from pandemic emergency tools [Home](https://www.federalreserve.gov/releases/h41/current/h41.pdf) **Foreign Exchange Reserves** 19.32 0.29% +0.49 +1.44 Primarily euro, yen, and GBP swap positions [Home](https://www.federalreserve.gov/releases/h41/current/h41.pdf) **Gold Reserves** 11.04 0.16% 0 0 Nominal value fixed at $42.22/oz since 1934 [Home](https://www.federalreserve.gov/releases/h41/current/h41.pdf) **Other Assets** 41.18 0.61% +2.83 \-1.68 Includes accrued interest, fixed assets, etc. [Home](https://www.federalreserve.gov/releases/h41/current/h41.pdf) **Total Assets** **6,727.1** 100% \-0.30 \-678.4 Consolidated statement (Table 5) [Home](https://www.federalreserve.gov/releases/h41/current/h41.pdf) \* Annual change refers to comparison with the same period in 2024. ### Key Asset Structure Observations **Long-Term Securities \> 95%**: Treasuries + MBS durations are concentrated in the \>5-year range. QT is achieved by letting holdings mature without reinvestment (Treasuries) and capping passive MBS reinvestment at $35B/month. [Home](https://www.federalreserve.gov/releases/h41/current/h41.pdf) **Liquidity Tools Nearly Exited**: BTFP balance has zeroed out; Discount Window balances remain low, indicating overall ample banking system liquidity. [Home](https://www.federalreserve.gov/releases/h41/current/h41.pdf)[Home](https://www.federalreserve.gov/financial-stability/bank-term-funding-program.htm?utm_source=chatgpt.com) ## 2 Liability Overview (Snapshot) Liability Item Balance ($Barrick Mining(B.US)arrick Mining(B.US)) Notes Currency in Circulation (FR Notes) 2,377.96 ~36% of liabilities [Home](https://www.federalreserve.gov/releases/h41/current/h41.pdf) Bank Reserves 3,280.85 Rising share during QT, still the system's liquidity anchor [Home](https://www.federalreserve.gov/releases/h41/current/h41.pdf) **Overnight Reverse Repo (ON RRP)** 412.43 Down \>80% from peak of $2.2T [Home](https://www.federalreserve.gov/releases/h41/current/h41.pdf)[FRED](https://fred.stlouisfed.org/series/RRPONTTLD?utm_source=chatgpt.com) **Treasury General Account (TGA)** 638.78 Federal cash management tool [Home](https://www.federalreserve.gov/releases/h41/current/h41.pdf) Other Deposits/Payables 236.13 Includes GSE, FMU deposits, etc. [Home](https://www.federalreserve.gov/releases/h41/current/h41.pdf) Capital 44.23 Statutory 6% member bank capital & surplus [Home](https://www.federalreserve.gov/releases/h41/current/h41.pdf) ## 3 Scale and Trends **Peak→Current**: Reduced from ~$8.999T in 2022 to $6.727T, with cumulative QT contraction of ~$2.27T. [FRED](https://fred.stlouisfed.org/series/WALCL?utm_source=chatgpt.com)[Reuters](https://www.reuters.com/markets/us/ny-fed-survey-shows-big-banks-still-expect-spring-stop-balance-sheet-drawdown-2024-10-10/?utm_source=chatgpt.com) **Pace Adjustment**: The March 2025 FOMC meeting decided to lower the **Treasury runoff cap from $25B→$5B** while maintaining the MBS cap at $35B, continuing QT at a "more gradual" pace. [Reuters](https://www.reuters.com/markets/us/fed-minutes-show-some-debate-over-balance-sheet-runoff-slowdown-2025-04-09/?utm_source=chatgpt.com) **ON RRP Rapid Decline** has eased pressure on bank reserve reductions, making it a key indicator for QT pacing. [FRED](https://fred.stlouisfed.org/series/RRPONTTLD?utm_source=chatgpt.com)[Reuters](https://www.reuters.com/markets/us/fed-minutes-show-some-debate-over-balance-sheet-runoff-slowdown-2025-04-09/?utm_source=chatgpt.com) ## 4 Policy Implications and Risk Monitoring ### Liquidity and Rates **Reserves vs RRP**: When RRP balances fall to the $300-500B range and reserves approach $2.8-3.0T, markets generally expect QT to near its "technical floor." [Reuters](https://www.reuters.com/markets/us/ny-fed-survey-shows-big-banks-still-expect-spring-stop-balance-sheet-drawdown-2024-10-10/?utm_source=chatgpt.com) **Liability Reallocation**: The inverse relationship between TGA and RRP creates money market rate volatility, requiring the Fed to finely calibrate the corridor between RRP rates (ON RRP) and IOER. ### Asset Duration and Reinvestment **MBS Duration Extension**: Higher rates have slowed prepayments, causing natural MBS maturities to fall short of the $35B/month cap, resulting in slower QT progress. **Treasury Reinvestment Peaks**: With large TIPS and note maturities in 2025-26, reinvestment/redemption strategies will be critical for QT pacing. * * * ### Conclusion The Fed's latest balance sheet stands at **$6.73 trillion**, dominated by **Treasuries ($4.22T)** and **MBS ($2.19T)**, while liquidity tools and pandemic relief balances have nearly exited. Liabilities are primarily **bank reserves ($3.28T)** and **currency in circulation ($2.38T)**, with **ON RRP declining to $0.41T**. QT has reduced assets by over $2.2T; future pacing will hinge on **reserve adequacy** and **RRP natural depletion**, with the FOMC already slowing Treasury runoff in March. ## 评论 (2) - **龙场悟道忘忧草 · 2025-04-18T03:07:38.000Z**: professional - **棕榈树 · 2025-04-18T02:38:54.000Z**: To solve the U.S. debt problem, gold will rise no matter which method is chosen, and U.S. debt carries the highest risk.