Data as of October 21, 2026, evening Pacific time. Fed balance sheet figures are from the H.4.1 release for the week ended October 14, holdings from the New York Fed, Treasury cash from the Daily Treasury Statement through October 20.
Every few weeks someone on my feed declares that the Fed is doing stealth QE. The evidence usually offered is real: the central bank has been buying Treasury bills steadily all year. But when I went to the actual balance sheet tonight, the story that came out was much less exciting, and in a way more useful. The Fed is adding securities. The banking system is barely noticing.
The Number Everyone Quotes
Start with what the Fed holds. On October 1, 2025, its Treasury bill portfolio was about $195.5 billion. As of October 14, 2026, it is about $566.0 billion. That is roughly $371 billion of bills added in a little over a year, almost all of it since late December.
Now look at the red line. Over the same stretch, mortgage backed securities fell from about $2,078 billion to $1,891 billion, a drop of roughly $187 billion as they quietly roll off. So about half of the bill buying simply refills the hole that mortgage runoff leaves behind.
The net effect on total securities held outright, per the H.4.1 weekly average: $6,470 billion, up about $185 billion from a year ago. Real growth, yes. A flood, no.
Where The Money Actually Went
Here is the part I find genuinely interesting. Reserve Bank credit is up about $162 billion year over year. Bank reserves, the cash that actually greases the system, are up about $3 billion. Basically flat at roughly $3,022 billion.
So where did the rest go? Mostly into two places:
- Currency in circulation: up about $70 billion from a year ago, to roughly $2,488 billion
- The Treasury's own cash account at the Fed (TGA): weekly average up about $74 billion, and the daily statement shows it closing at about $974 billion on October 20
- Overnight reverse repo: just $0.24 billion taken on October 21, compared with about $4.7 billion on the same day last year
That last bullet matters more than it looks. In past years the reverse repo facility was a giant pool of idle cash that could drain into markets when the Treasury needed to borrow. That pool is now essentially empty. Its biggest day in 2026 was only about $26.9 billion, on June 30. There is no spare tank left to tap.
The Fed is not printing a tailwind. It is paying the plumbing bill so that the Treasury's cash pile and our wallets do not come straight out of bank reserves.
The Scoreboard
| Measure | A year ago | Latest | Change |
|---|---|---|---|
| Fed bill holdings | $195.5B | $566.0B | +$371B |
| Fed mortgage holdings | $2,078B | $1,891B | about minus $187B |
| Bank reserves (weekly avg) | about $3,019B | $3,022B | +$3B |
| 10 year Treasury yield | 3.96% | 5.15% | +1.18 pts |
| Dollar index | 98.93 | 101.69 | +2.8% |
| Bitcoin | about $107,700 | about $84,100 | about minus 22% |
What The Market Is Telling Us
If this were truly easy money, I would expect long yields to drift lower and the dollar to soften. Instead the 10 year yield sits near 5.15%, up more than a full point in a year, while the 13 week bill yields about 4.06%. The Fed buying short paper does almost nothing for the long end, and the long end is where mortgages, corporate borrowing and equity valuations are priced.
Meanwhile the S&P 500 is near 7,757, up roughly 16% from a year ago, while Bitcoin is down about 22% over the same window. That split is hard to square with a liquidity wave. It looks more like stocks are running on earnings and AI spending while the most liquidity sensitive asset I track has been starved.
The Contrarian Read
My slightly unpopular view: the bill buying is defensive, not stimulative. With reverse repo drained, any big jump in the Treasury's cash balance has to come out of reserves directly. The Fed is buying bills so that does not tip funding markets into stress. That is a good thing for stability. It is not the same as rocket fuel for risk assets.
The Takeaway
Three things I am watching from here:
- Tomorrow's H.4.1 release, to see whether reserves finally start rising or keep getting absorbed.
- The Treasury cash balance, now close to $1 trillion. A drawdown would quietly add reserves; another build would quietly drain them.
- The 10 year yield, because a Fed balance sheet that grows while long rates climb is not easing anything that matters for valuations.
Liquidity is not tightening, but it is not loosening either. It is being managed. If you are holding risk on the assumption that the Fed has turned the taps back on, the data I see tonight does not back you up yet.
So here is my question for you: do you read the Fed's bill buying as quiet support for markets, or just as plumbing that keeps the lights on?
Sources: New York Fed SOMA holdings and Federal Reserve H.4.1 release
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