The Fed’s balance sheet took a huge drop last week. In spite of all of the direct buying of securities total Fed credit has actually declined slightly since December thanks to the winding down of many of the Fed’s alphabet soup programs, some of which have already gone back to zero balances. Meanwhile the Fed’s direct purchases of Treasuries and GSEs are supercharging the trading accounts of the primary dealers. While they are caught on the long side of the Treasury market, we continue to see the usual relationship between the stock market and the amount of Fed credit going to the PDs. Click here to download complete report in pdf format (Professional Edition Subscribers). Try the Professional Edition risk free for thirty days. If, within that time, you don’t find the information useful, I will give you a full refund. It’s that simple. Click here for more information.