Thursday, October 6, 2016

Fed Sold The Most Since 2012

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*Watching Federal Reserve balances hints at two things; what are the Fed's intentions and where can markets go.
*The Fed sold a recent record of assets which implies a tightening.
*This has the ability to cap market upside.



We've been tracking changes in Federal Reserves for some time. It helped uspredict a nice up move ahead of the last FOMC rate decision. The Fed's recent moves though show a big drop in reserves which is a market negative. It also may imply a continued hint to Fed tightening of monetary policy. We'd guess that the market upside can be capped out. If correct, that would call for taking profits if we were to get an up move.
Here's the recent changes in Federal Reserve balances.
ReservesWeek To Week ChgWk to WkYTD Chg
2016-08-244227711875610.08$5,665,577,8570.13%0.06%
2016-08-314212673983393.06-$15,037,892,217-0.36%-0.30%
2016-09-074212675983165.18$1,999,7720.00%-0.30%
2016-09-144232164926101.79$19,488,942,9370.46%0.16%
2016-09-214224034597317.01-$8,130,328,785-0.19%-0.03%
2016-09-284203567172677.74-$20,467,424,639-0.48%-0.51%

Last week's move was the largest week-to-week decline since November 2012.
Here's the chart of where Fed balances stand currently.

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