A few days ago, the Federal Reserve announced its financial report for the first quarter of 2022. While its total assets rose to $8.9 trillion, its holdings of U.S. debt and mortgage-backed securities (MBS) suffered a book loss of more than $330 billion, or about 22,000 yuan. 100 million yuan – this is almost equivalent to the latest market value of Kweichow Moutai.

It is worth noting that the Fed has previously announced that it will officially begin to shrink its balance sheet from June. If it tries to speed up the process of shrinking the balance sheet by reducing its holdings of MBS, the book loss may turn into an actual loss.

Not only the Federal Reserve, but the Swiss National Bank (SNB), the Swiss National Bank, also suffered a loss of 32.8 billion Swiss francs (close to 230 billion yuan) in the first quarter of this year. Russia-Ukraine conflict.

The Fed loses 2.2 trillion yuan in the first quarter

According to the Federal Reserve’s official website, as of the end of the first quarter of 2022, the U.S. Treasury bonds and mortgage-backed securities (MBS) held by the Federal Reserve’s system open market account (SOMA) suffered a total book loss of $330.498 billion. Based on the latest exchange rate of RMB against the U.S. dollar, the Fed’s book floating loss in the first quarter of this year was as high as 2.2 trillion yuan.

According to fair value calculation, as of the end of the first quarter of 2022, the market value of the US$2.77 trillion MBS held by the Federal Reserve has dropped to US$2.61 trillion, and the total book value has shrunk by US$164.072 billion. The total US debt held by the Fed has shrunk by over 166 billion. Dollar.

Behind the floating losses on the Fed’s books is the quantitative easing policy it has launched, and the Fed’s balance sheet has continued to accumulate to a scale of $8.9 trillion. In order to curb inflation, the Federal Reserve announced that it will officially shrink its balance sheet from June 1, which means that its book losses may become actual losses.

The Fed’s balance sheet reduction plan announced earlier shows that it will shrink its balance sheet at a rate of US$47.5 billion per month from June, including US$30 billion in national debt and US$17.5 billion in agency debt and MBS; The size of the table will be expanded to a maximum of US$95 billion, including US$60 billion in national debt and US$35 billion in MBS.

Judging from the minutes of the Fed’s May meeting on interest rates, all participants supported the plan to reduce the size of the balance sheet. As for the risks associated with the shrinking of the balance sheet, some participants noted that “there may be unintended effects on financial market conditions”.

In the view of Industrial Securities, the narrow policy space and the continuous accumulation of negative feedback on household consumption due to the continuous correction of the stock market have increased the external constraints of the Federal Reserve.

Industrial Securities believes that if demand falls faster than supply is repaired, it does not rule out the possibility that the Fed will turn to easing in order to achieve a soft landing of the economy, and the focus can be on the third quarter.

Swiss National Bank also “missed” in the first quarter

The Swiss National Bank (SNB) also posted huge losses in the first quarter of this year.

According to SNB’s quarterly report, the Swiss National Bank lost CHF 32.8 billion in the first quarter of 2022.

The report stated that the rise in interest rates in the first quarter was the main reason for the loss of the Swiss National Bank’s performance. The rise in interest rates led to the depreciation of bonds, with a total loss of 25.1 billion Swiss francs; stocks and other securities were affected by rising interest rates and the Russian-Ukrainian conflict. 10.7 billion Swiss francs.

The report shows that in the first quarter, the Swiss National Bank’s foreign exchange holdings decreased by 36.8 billion Swiss francs, while gold holdings remained unchanged, valuation increased by 4.2 billion Swiss francs, and Swiss franc holdings rose slightly by 10.6 million. The report emphasized that the performance of the central bank mainly depends on the conditions of gold, foreign exchange and capital markets, so sharp fluctuations are normal, and the impact of interim results on annual results is limited.

The Swiss National Bank’s earnings are closely linked to the movements of the stock market and the Swiss franc. Last year, the bank made a profit of more than 26 billion Swiss francs, with positive results in the first two quarters and losses in the third and fourth quarters. Profits were CHF 20 billion in 2020, after losses of nearly CHF 15 billion in 2018 and more than CHF 23 billion in 2015.

This article is reprinted from: https://news.futunn.com/post/16171022?src=3&report_type=market&report_id=207283&futusource=news_headline_list
This site is for inclusion only, and the copyright belongs to the original author.