The Banking and Strategy Initiative

Chillin' out till it needs to be funded

US Economy (EoD Review): Fed Balance sheet shrinks to $2.8 Tln

The Fed Balance sheet shrunk again, making it likely 7 times out of 10 in the last few weeks as the Fed stopped buying back MBS contracts to keep markets goin. The Liquidity situation though is not clear fromt he Fed’s money supply numbers going with the broader measures of the Economy in an On again, Off again mode with this week liquidity improved by $30 bln even as Central Liquidity swaps shrunk $18 bln. Now when Portugal acts up again, you could go back nearer to $3 tln without missing a beat.

And as not much Fed help was required this week, Reserve Bank credit was also down almost $30 bln. Also, though Good Friday is not a Federal Holiday, the bond auctions for next week have been announced and are ready to steamroll more money  into circulation. Two shockers report on the market holiday of April 06 with the BLS Employment Situation Report i.e. the Jobs report, followed by the Consumer Credit report

The Bloomberg Consumer confidence number, if you are one of the few following it is 70% about consumer spending and I do not think the Economy can go where it wants on Spending alone, but the -31 number is fair indicator of things being better than ever before

A three year and a 10 year auction test more capacity for US debt, probably domestic investors are taking charge as the US chugs on a flatlined economic recovery basis for a few more weeks hopefully before jumpin gon to a new orbit or breaking down.

For some strange reason, the comeback quarter for JP Morgan still makes analysts feel JP Morgan will be rporting lower earnings while Wells Fargo will be reporting 10% better profits on new branches and retail business ( Bloomberg, you are so wrong!) Investment and Trading not doing well in Q1 will decidedly count against any bank regardless of  their lobbying spend..


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This entry was posted on April 5, 2012 by in Amitonomics, Banking, US and tagged , , , , , , , .


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