NEW YORK, July 2 (Reuters) - The U.S. Federal Reserve's balance sheet shrank below $2 trillion for the first time since early March in the latest week, signaling less strain in the financial system, Fed data showed on Thursday.
The Fed's balance sheet liabilities -- a broad gauge of its lending to the financial system -- contracted to $1.989 trillion on Wednesday from $2.010 trillion a week ago.
This is the smallest since March 11 when its balance sheet stood at $1.882 trillion.
The decline in the U.S. central bank's assets stemmed from fewer overnight loans to banks, less dollar lending overseas and a drop in commercial paper holdings.
Overnight direct loans to bank via the Fed's discount window averaged $118.88 billion per day in the latest week, lower than $123.70 billion a day in the prior week.
The Fed's liquidity swap lines with foreign central banks to provide dollars averaged $115.30 billion per day in the latest week, down $6.29 billion per day from prior week's average, according to Fed data.
The Fed's Commercial Paper Funding Facility assets totaled $114.69 billion on Wednesday, lower than $124.03 billion a week ago. The decrease in this backstop for this type of short-term corporate IOU reflected an increase in companies choosing to issue longer-term debt to lock in financings in the current low-rate environment, according to analysts.
Earlier Thursday, the Fed reported commercial paper outstanding fell to its lowest level in at least 8-1/2 years to $1.136 trillion in the week ended Wednesday.
The week's notable increase was roughly a $10 billion week over week rise in its Treasury holdings to $663.47 billion.
The Fed has been buying Treasuries and mortgage-related assets in an effort to pare mortgage and other long-term rates to revive the economy.
The central bank's holdings of agency mortgage-backed securities dipped to $462.44 billion on Wednesday from $467.23 billion a week earlier.
The Fed bought a net $23.01 billion of these mortgage bonds in the week of June 25 to July 1 but not all the agency MBS purchased are immediately delivered to the Fed. See
(Reporting by Richard Leong, Editing by Chizu Nomiyama) Keywords: USA FED/DISCOUNT (richard.leong@thomsonreuters.com ; +1 646 223 6313; Reuters Messaging: richard.leong.reuters.com@reuters.net ) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The Fed's balance sheet liabilities -- a broad gauge of its lending to the financial system -- contracted to $1.989 trillion on Wednesday from $2.010 trillion a week ago.
This is the smallest since March 11 when its balance sheet stood at $1.882 trillion.
The decline in the U.S. central bank's assets stemmed from fewer overnight loans to banks, less dollar lending overseas and a drop in commercial paper holdings.
Overnight direct loans to bank via the Fed's discount window averaged $118.88 billion per day in the latest week, lower than $123.70 billion a day in the prior week.
The Fed's liquidity swap lines with foreign central banks to provide dollars averaged $115.30 billion per day in the latest week, down $6.29 billion per day from prior week's average, according to Fed data.
The Fed's Commercial Paper Funding Facility assets totaled $114.69 billion on Wednesday, lower than $124.03 billion a week ago. The decrease in this backstop for this type of short-term corporate IOU reflected an increase in companies choosing to issue longer-term debt to lock in financings in the current low-rate environment, according to analysts.
Earlier Thursday, the Fed reported commercial paper outstanding fell to its lowest level in at least 8-1/2 years to $1.136 trillion in the week ended Wednesday.
The week's notable increase was roughly a $10 billion week over week rise in its Treasury holdings to $663.47 billion.
The Fed has been buying Treasuries and mortgage-related assets in an effort to pare mortgage and other long-term rates to revive the economy.
The central bank's holdings of agency mortgage-backed securities dipped to $462.44 billion on Wednesday from $467.23 billion a week earlier.
The Fed bought a net $23.01 billion of these mortgage bonds in the week of June 25 to July 1 but not all the agency MBS purchased are immediately delivered to the Fed. See
(Reporting by Richard Leong, Editing by Chizu Nomiyama) Keywords: USA FED/DISCOUNT (richard.leong@thomsonreuters.com ; +1 646 223 6313; Reuters Messaging: richard.leong.reuters.com@reuters.net ) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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