Fed balance sheet more than $4 trillion before pause
The Federal Reserve's balance sheet boasted $4.17 trillion in assets as recently as Wednesday, but 2020 activity could signal a holding pattern. The bank began winding down its quantitative easing stockpile in early 2018 when assets were near $4.5 trillion, lowering that number to about $3.76 trillion by August 2019. Over that period, Treasury rates, measured by the 10-year government bond, rose steadily, even breaking 3% for a period in late 2018.
The balance sheet runup in 2019 came following a dive in interest rates and preceded the equity markets 10% run over the last four months of the year. A chicken-or-the-egg argument could be made for what drove rates lower and equities higher, but the Fed's stated lower-for-longer policy, bolstered by three rate cuts between August and October, tells investors where they're not going to find much yield.