The Federal Reserve's Balance Sheet In Four Charts
Last week, the Federal Reserve announced it will stop shrinking its $4 trillion balance sheet by the end of September 2019 and would like to get back to a balance sheet consisting mostly of Treasuries. Currently, Treasuries account for approximately 55% of the assets on the Fed's balance sheet, MBS account for 40%, and 5% other assets, including gold. Check out the full article with charts below.
Bond market flashing its biggest recession signal since 2007
At the same time last week, the spread between 3-month and 10-year Treasury notes dipped below 10 basis points for the first time since 2007, indicating a strong recession signal. However, Federal Reserve Chairman Jerome Powell asserted that the U.S. economy remains strong but is facing challenges from global weakness.
Goldman Sachs believes a recession is less likely
Even though the 3-month Treasury yield rose above the 10-year yield, sending up all kinds of recession scares, Goldman Sachs strategists say it’s not sending the same powerful recession signal it has in the past. Goldman says it’s more usual to see the 2-year yield break above the 10-year yield first.