WEEKLY FED BALANCE SHEET REVIEW. RESILIENCE AMID THE GLOOM & DOOM
. Federal Reserve: "Factors Affecting Reserve Balances", October 17

- Fed's Treasuries holdings: $783.7bn (+$0.4bn)
- Other central banks' Treasuries holdings: $1,230.2bn (+$8.4bn) (*)
- Other central banks' agency securities: $788.0 (+$6.0bn) (*)
- Global Dollar Liquidity Measure: $2,801.9bn (+$14.7bn)

(*) Off-balance-sheet items
agustin_mackinlay@yahoo.com
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Amid all the gloom and doom surrounding the dollar and the earnings outlook in the banking sector, the weekly Fed balance sheet manages to produce an unmistakable sign of resilience. In all likelihood, October will end as the 59th month in a row with our Global Dollar Liquidity measure rising at more than 10% annually. This is, of course, unprecedented — and I take it as a vote of confidence in the strength of the global economy.

Until proven wrong on that score, I will stick to the following key insights when interpreting the data: [1] The custody numbers, while woefully incomplete, are delivered in almost real-time, and are as such much more valuable than their TIC cousins; [2] To the extent that BRICs entrepreneurs are willing to take on more risks in their own currencies, their actions will naturally be reflected in official CB intervention in the U.S. bond market. (In other words, is official intervention such a bad thing?)