Fed’s Repos Drop to Oct Level, T-Bills Surge, But MBS Fall, and Total Assets Decline Further

by Wolf Richter
Wolf Street

Those counting on the Fed’s endless “Not-QE” or whatever to inflate the market might be disappointed.

The Fed had doused the market with $410 billion in liquidity between September and January 1 through its repo operations and its T-bill purchases. Market hype had expected this blistering pace of money-printing to continue, but wait… While T-bill purchases continue, the repos on the Fed’s balance sheet are getting unwound, its mortgage-backed securities (MBS) continue to fall, and total assets on its balance sheet fell to the lowest level since mid-December.

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