Fed’s QT: Total Assets Drop by $206 Billion from Peak | Wolf Street

Total assets dropped by $37 billion from the prior week, by $63 billion from the balance sheet released on September 8, and by $206 billion from the peak on April 13, to $8.76trillion, the lowest since December 2021.

QT is the opposite of QE. With QE, the Fed created money that it pumped into the financial markets by purchasing securities from its primary dealers, who then sent this money chasing assets across the board, which inflated asset prices and pushed down yields, mortgage rates, and other interest rates. QT does the opposite and is part of the explicit tools the Fed is using to get this raging inflation under control.

The Fed borrows money from the banks when the banks put cash on deposit at the Fed (the “reserves”). The Fed pays the banks currently 3.15% in interest on $3.08 trillion in reserves. They’re a liability on the Fed’s balance sheet, not an asset, and they don’t belong here. I just bring them up because…

Fed’s QT: Total Assets Drop by $206 Billion from Peak | Wolf Street