WEEKLY FED BALANCE SHEET REVIEW. BUSINESS AS USUAL
. Federal Reserve: "Factors Affecting Reserve Balances", May 16

- Fed's Treasuries holdings: $775.8bn (-$0.8bn)
- Other central banks' Treasuries holdings: $1,224.7bn (-$3.3bn) (*)
- Other central banks' agency securities: $715.2bn (+$12.1bn) (*)
- Mackinlay's Global Dollar Liquidity Measure: $2,715.8bn (+$8.1bn)

(*) Off-balance-sheet items.
agustin_mackinlay@yahoo.com
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It's business as usual in terms of the weekly Fed balance sheet. While the Fed's balance sheet barely moved —courtesy of the inverted yield curve—, foreign central banks eagerly snapped up $12bn in agency securities. At $715bn, the stock of such custody holdings is at a new all-time high. Overall liquidity growth is strong: our Global Dollar Liquidity Measure is growing at a 13.85% annual rate. Business as usual!

The Endogenous Liquidity Index surged 2.08%, spurred (mostly) by falling high-yield bond spreads. Meanwhile, the Goldilocks/Stagflation indicator appears to be moving decidedly in favor of Goldilocks, as the platinum/gold ratio reaches 2 (strong global growth), and the spread between plain and inflation-indexed Treasuries falls (decreasing inflation expectations).