The size of the Federal Reserve’s balance sheet rose 2.3 percent as the central bank bought more U.S. Treasuries and mortgage-backed securities. [1]

Yep, that’s a 2.3 percent rise over the previous week. I’d ask Doomers to now briefly review last week’s episode in this series of posts. Remember all the foofah about record numbers of indirect buyers? … which includes foreign central banks? Well, had the cenbanks actually gone on a buying spree scooping up US debt back then, it should now be showing up in this post.

It hasn’t.

Looks like last week’s ballyhooed foreign support for that big treasuries auction was largely a mirage.

For all the noise and fury about recent Treasury Debt auctions this week’s Reuters report [2] showed positive, but only modest increases in both types of holdings. The report was, as usual, based on the weekly update from the NY Fed’s H.4.1 table site.[3] Here is Doom’s updated CSV version of the agencies and treasuries foreign central bank holdings data set.[4]

SPECIAL NOTE: Igor is helping Doom out by flying twist around Texas looking for future stories, and they spent most of last evening out of internet range. Readers are asked to use their imagination until they land back at the Castle and twist can get back to the charts.

ANOTHER SPECIAL NOTE:  The Twists have landed.  I’m back in range- at least for the moment.  :  ) Twist

Treasuries grew a mediocre $5.021 billion. Whoever those record-breaking indirect buyers were 8 days ago, they sure weren’t this gang.

Agencies grew for the first time in 10 weeks, but only by a paltry $2.157 billion. The figure was just $300 million more than last week’s slight selloff. On the other hand, this week’s Puplava number showed an enormous $66.646 billion leap in the Fed’s own holdings of agencies. The Fed’s pattern has been a big splurge every few weeks, and maybe these pulses are being felt indirectly by markets that don’t know they’ve got the Fed as a dominant counterparty.

The addition of $7.178 total obligations gives the raw numbers graph a bit of an upward push.

Twist’s ratios graphs clicked down fractionally.

Setser’s 52-week change graph was flat for the treasuries, because last year at this time there was also a small increase. For agencies, there was a modest decrease, so the red line trends up a bit.

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Notes and References

[1]: "Fed Assets Increase 2.3% on Buying of MBS, Treasuries", Craig Torres, Bloomberg, August 20, 2009.

[2]: "Foreign c.banks’ U.S. debt holdings up in week – Fed", by Burton Frierson, Reuters, August 20, 2009.

[3]: "H.4.1 Factors Affecting Reserve Balances", Federal Reserve Statistical Release (weekly), Federal Reserve Bank of New York.

[4]: The updated data set as a Comma Separated Value (CSV) file is here.

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