Econoday Economic Report: Fed Balance Sheet August 9, 2012

2012 Economic Calendar

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Fed Balance Sheet

Released On 8/9/2012 4:30:00 PM For wk8/8, 2012

	Prior	Actual
Total Assets - Weekly Change	$4.3 B	$5.1 B
Reserve Bank credit - Weekly Change	$-10.9 B	$1.5 B

Highlights
For the August 8 week, total assets expanded $5.1 billion after rising $4.3 billion the prior week. The latest increase was due to a $3.1 billion gain in Fed holdings of Treasuries and a $2.5 billion increase in "other assets" (largely those denominated in foreign currencies). Partially offsetting was a $1.0 billion decline in central bank liquidity swaps.

Reserve Bank credit for August 8 week rebounded $1.5 billion, following a drop of $10.9 billion the week before.

Note: Total assets in the Fed's H.4.1 report are Wednesday levels while Reserve Bank credit is an average of daily figures for the week ending on the same Wednesday. Changes in total assets are from Wednesday to Wednesday while changes in Reserve Bank credit are for weekly averages.

Definition
The Fed's balance sheet is a report showing factors supplying reserves into the banking system and factors absorbing (using) reserve funds. Essentially, the balance sheet shows the various Fed programs for injecting liquidity into the economy and how much the Fed has used each for adding or withdrawing reserves. This report is called Factors Affecting Reserve Balances - or the "H.4.1" report using Fed jargon. Why Investors Care

The Fed began using its balance sheet to expand liquidity starting in late 2008. Quantitative easing QE1 started in late 2008 and QE2 began in late 2010 and ended in June 2011. However, the level of the Fed's assets (reflecting available liquidity) remains quite elevated.
Data Source: Haver Analytics