Below is the Feds balance sheet.
Below are the total assets which they are slowly reducing.
I find it interesting that the fed bought treasury bills the past two weeks. They have not bought any since August 2007 and had zero bills since august 2012.
For the first time in over a decade, the federal reserve bought treasury bills. The number is minuscule and I will be watching what happens over the next few weeks. Since I can not find a single person online making a comment on this development I thought I would add my two cents.
Ten years ago, there were probably 100 people on the planet that watched the yield curve and understand its power to predict recessions. Now, at least once a week, I see an article on the yield curve. Everyone is talking about it. Everyone is watching it.
In fact, it hit the top of the “popular series” at the FRED.
This business about the yield curve has definitely bubbled up to the fed board members. Hack economist at the Fed have written papers about it. Most of the papers revolve around, “This time is different”.
So the million dollar questions is this:
Is the fed trying to control the yield curve? If so, how far are they willing to go to keep it positive?
I don’t see any other reason why they started to buy the short end of the yield curve. The next few weeks will be interesting.