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.

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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:

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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 covering the latest developments 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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