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Credit creation, cause and effect
Here's what you need to know about the Fed, interest rates, money creation, and the economy this week:
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Latest data: April 28th 2023
TLDR: Last week, the Fed trimmed $9bn net from its Treasury security holdings and trimmed $9bn net from its mortgage-backed security (MBS) holdings. The total amount of Reserve Bank credit shrank by $32bn net.
- The 10-year Treasury yield fell by 17bp to 3.43%
- The 30-year fixed-rate mortgage rose by 12bp to 6.39%
- The market expects the federal funds rate to peak between 5–5.25%
I also share this weekly update as a Twitter thread if you prefer.
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The Federal Reserve buys and sells securities and sets interest rates. It targets borrowing costs, money creation, price stability, and productivity.
The Federal Reserve buys and sells securities
And sets interest rates
It targets borrowing costs
Money creation
Price stability
And productivity
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Sources
- Fed balance sheet h.4.1 weekly releases - federalreserve.gov/releases/h41/
- Raw data - fred.stlouisfed.org
- My newsletter - valuabl.substack.com
Notes
- I will update this data weekly, usually Friday morning British time
- Let me know in the comments if you would like something changed or added
- I also share this weekly update as a thread on Twitter if you prefer that
Twitter
Edmund Simms on Twitter
“1/ Here's what you need to know about the Fed, interest rates, money creation, and the economy:”
Always love your charts! Great way to present the data.
It took me a minute to wrap my head around this one, but once I did I think this is a really great way to visualize and compare the current yield curve to a year ago:
@nathanworden a year ago, the yield curve was not inverted (the short end of the yield curve was not higher than the long end)
But three months ago (and now), the 3m and 1y treasury security is/ was paying more than the 10 year.
Much uncertainty about the future.
@nathanworden Yes. The long-term (5yr+) outlook for the economy is similar. But the short-term outlook is vastly different now than it was a year ago
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