📍 The Fed's balance sheet is swelling again

In February, the Fed's balance sheet increased by $42B, reaching $6.63T — the second-highest level since August.
Since the launch of the RMP program in December, the Fed has injected approximately $93B liquidity into the system. Most of this comes from purchasing T-bills around $40B/month.
Meanwhile, MBS continues to shrink, now at $2.01T, which is 27% below the peak when the Fed was gradually allowing assets to mature.
Notably, the structure of the balance sheet is changing. The Fed is gradually reducing MBS holdings but increasing T-bill holdings, meaning liquidity is still being pumped into the financial system, just in a different form. Simply put, the Fed is tapering on paper, but in reality, it is quietly expanding the balance sheet again.