WEEKLY FED BALANCE SHEET REVIEW. THE LIQUIDITY BOOM ENTERS ITS 54TH MONTH!
. Federal Reserve: "Factors Affecting Reserve Balances", May 2

- Fed's Treasuries holdings: $785.8bn (+$10.2bn)
- Other central banks' Treasuries holdings: $1,227.3bn (-$0.7bn) (*)
- Other central banks' agency securities: $699.5bn (+$9.4bn) (*)
- Mackinlay's Global Dollar Liquidity Measure: $2,712.6bn (+$18.8bn)

(*) Off-balance-sheet items.
agustin_mackinlay@yahoo.com
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The global liquidity boom, defined as a 10% or more annual rate of growth in our Global Dollar Liquidity Measure, has just entered its fifty-fourth month. To the best of my knowledge, this is unprecedented. Both the Fed and foreign central banks actively added to their portfolios. The Fed did so through unusually large repo operations. Foreign CBs bought more than $9bn in agency securities, leaving the stock of such custody holdings at a new record level, just below $700bn.

Meanwhile, our preliminary Endogenous Liquidity Index (ELI) fell 0.9% during the week, dragged down by slightly higher junk bond and CDS spreads. I'll take it as a mildly bearish short-term sign in an otherwise very supportive long-term liquidity environment.