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The numbers: The Federal Reserve’s balance sheet grew to a record $6.98 trillion in the week ended May 13, up from $6.72 trillion in the prior week, the central bank said Thursday.
What happened: Much of the balance sheet’s expansion was due to an increase in its holdings of mortgage-backed bonds by $178 billion.
Analysts noted most of these purchases had, in fact, taken place a few weeks ago and were showing up on the balance sheet in the most recent weekly period because that was when they were finally transferred into the Fed’s hands.
Meanwhile, holdings of Treasurys rose by $37 billion.
Outside of the Fed’s purchases of bonds, other contributors to the Fed’s portfolio didn’t see much change, as many of the Fed’s emergency lending programs saw decreased use.
The Fed’s facility supporting the Paycheck Protection Program, however, saw its assets grow to $40.6 billion from $29.2 billion.
Swap lines offering dollars to other central banks fell by $3.95 billion to $440 billion, suggesting demand for the greenback was starting to wane.
Big picture: Roberto Perli of Cornerstone Macro Research said demand for the Fed’s aid appears to have fallen.
Market action: The yield on the 10-year Treasury note TMUBMUSD10Y, 0.620% fell 3.1 basis points to 0.617% on Thursday.
