FED Balance Sheet

Again we look at the FED Balance Sheet and not surprisingly it continues to expand. Above we show the two key elements; Treasuries and MBS. What is surprising is the explosive growth of the MBS. It is as if the FED is just soaking up whatever junk is left after five years. The Treasuries are also expanding but at a slower rate as we had shown regarding the lower deficit.

The above shows some more detail. Frankly all other elements are nominal and not significant.

The problem will start with the unloading. The ride down will be worse than the ride up.