Fed Balance Sheet Tops $7 Trillion in Bullish Scenario for Safe Havens

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In Brief
  • The Fed's balance sheet has exceeded $7 trillion.

  • More than three-quarters of recent purchases were mortgage backed securities.

  • Ongoing fiscal stimulus packages are bullish for safe-haven assets.

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In its ongoing battle against economic collapse, the U.S. central bank has been taking more extreme measures. These have caused its balance sheet to exceed $7 trillion as financial stimulus packages keep rolling out.



Just like a regular business, the Fed’s balance sheet consists of assets and liabilities. According to data provided by the Federal Reserve Bank of St. Louis, that balance sheet has risen to a new record high of $7.03 trillion this week.

Source: https://fred.stlouisfed.org/

Messari crypto research analyst, Ryan Watkins [@RyanWatkins_] noted that this was equivalent to 32% of GDP. He added:



Of the $100 billion in asset purchases this week, just under 80% were mortgage backed securities.

According to reports, JPMorgan and Goldman Sachs analysts suggest that this unprecedented balance sheet expansion is likely to continue. [FXStreet] This is primarily because the bond market will face a demand shortage, and the FED will need to step up purchases to keep yields depressed.

It was also noted that this will be bullish for safe-haven assets such as gold, which is already up over 13% this year. Unprecedented fiscal stimulus measures could also be very bullish for Bitcoin, as recently reported by Electric Capital.

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Martin has been writing on cyber security and infotech for two decades. He has previous trading experience and has been actively covering the blockchain and crypto industry since 2017.

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