The Fed hiked, yet its balance sheet is bigger than a year ago
Fed total assets were $6.743 trillion on September 30, 2026, up $155.9 billion on the year, as Treasury bill buying has replaced quantitative tightening.
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- What happened
- The Federal Reserve's H.4.1 release of October 1, 2026 put total assets at $6,743,031 million on Wednesday, September 30, 2026: $4,673 million lower than a week earlier and $155,912 million higher than on October 1, 2025. Treasury bills rose $364,718 million over the year while mortgage-backed securities fell $187,894 million.
- Why
- The Fed stopped shrinking its securities holdings on December 1, 2025. Its September 16, 2026 directive tells the New York Fed to roll over all maturing Treasuries, reinvest mortgage principal into Treasury bills, and buy bills when needed to keep reserves ample.
- The numbers that matter
- $6.743tnFed total assets, Wednesday September 30, 2026+$155.9bnChange in total assets from October 1, 2025+$364.7bnChange in Treasury bills held, same period$2.948tnReserve balances, average of the week to September 30, 2026
- Why it matters
- The Fed's portfolio decides how many Treasuries and mortgage bonds private investors must hold instead, which feeds into the yields on long-term borrowing, mortgages included, and into what money market funds can earn at the Fed.
- What happens nextas we saw it on 7 Oct 2026
- The H.4.1 is published every Thursday at 4:30 p.m.; the FOMC meets on October 27–28, 2026.
Fed total assets
Total assets are $2.22 trillion below the April 2022 level but $155.9 billion above October 2025.
| Apr 13, 2022 | 8.965 |
|---|---|
| Oct 1, 2025 | 6.587 |
| Sep 30, 2026 | 6.743 |
$ trillions, Wednesday levelsSource: Federal Reserve Board, H.4.1 Factors Affecting Reserve Balances, Table 5, releases of April 14, 2022 and October 1, 2026 (October 2025 level calculated from the year-on-year change)
Go deeper
On September 16, 2026 the Federal Open Market Committee raised its target range for the federal funds rate to 3.75%–4.00%, by a vote of 12–0. A rate rise is the textbook way to tighten. Yet the Federal Reserve's own balance sheet, published every Thursday, is larger than it was a year earlier, and the Fed is adding Treasury bills to it.
There is no contradiction in that, but it takes the machinery to see why. This piece reads the Fed's weekly H.4.1 release of October 1, 2026, the directive the Committee issued on September 16, and the Fed's own explanations of why any of it matters to borrowers.
$6,743,031m
Fed total assets
Wednesday, September 30, 2026
+$364,718m
Treasury bills held, change on the year
To September 30, 2026; holdings $560,211m
−$187,894m
Mortgage-backed securities, change on the year
To September 30, 2026; holdings $1,898,089m
What the October 1 release shows
Data
Total assets were $6,743,031 million on September 30, 2026
The Consolidated Statement of Condition of All Federal Reserve Banks (H.4.1, Table 5, released October 1, 2026) shows total assets of $6,743,031 million on Wednesday, September 30, 2026: −$4,673 million from Wednesday, September 23, 2026 and +$155,912 million from Wednesday, October 1, 2025. Securities held outright were $6,464,597 million, of which U.S. Treasury securities $4,564,161 million and mortgage-backed securities $1,898,089 million.
The Consolidated Statement of Condition of All Federal Reserve Banks (H.4.1, Table 5, released October 1, 2026) shows total assets of $6,743,031 million on Wednesday, September 30, 2026: −$4,673 million from Wednesday, September 23, 2026 and +$155,912 million from Wednesday, October 1, 2025. Securities held outright were $6,464,597 million, of which U.S. Treasury securities $4,564,161 million and mortgage-backed securities $1,898,089 million.
The weekly table below uses the Fed's averages of daily figures for the week, which smooth out single-day swings. September 30 was a quarter-end Wednesday, a day when money markets often move.
| Item | Week average | Change from week ended Sep 23, 2026 | Change from week ended Oct 1, 2025 |
|---|---|---|---|
| Securities held outright | 6,462,747 | −9,568 | +174,535 |
| U.S. Treasury securities | 4,560,550 | +2,771 | +360,668 |
| Mortgage-backed securities | 1,899,849 | −12,339 | −186,134 |
| Reverse repurchase agreements (total) | 329,260 | +13,117 | −85,359 |
| of which foreign official and international | 325,518 | +9,875 | −48,379 |
| of which others | 3,742 | +3,242 | −36,981 |
| Treasury General Account | 948,674 | −28,410 | +143,535 |
| Reserve balances with Federal Reserve Banks | 2,948,090 | +17,897 | −18,004 |
Source: Federal Reserve Board, H.4.1 Factors Affecting Reserve Balances, Table 1, released October 1, 2026
Wealth Signal calculation
The mix has shifted from mortgages to bills
On the Wednesday figures, Treasury bills were $560,211 million on September 30, 2026 after a rise of $364,718 million on the year, so the October 1, 2025 level was 560,211 − 364,718 = $195,493 million. Bill holdings are 560,211 ÷ 195,493 = 2.87 times their level a year earlier. Mortgage-backed securities fell from 1,898,089 + 187,894 = $2,085,983 million to $1,898,089 million. They are 1,898,089 ÷ 6,464,597 = 29.4% of securities held outright.
On the Wednesday figures, Treasury bills were $560,211 million on September 30, 2026 after a rise of $364,718 million on the year, so the October 1, 2025 level was 560,211 − 364,718 = $195,493 million. Bill holdings are 560,211 ÷ 195,493 = 2.87 times their level a year earlier. Mortgage-backed securities fell from 1,898,089 + 187,894 = $2,085,983 million to $1,898,089 million. They are 1,898,089 ÷ 6,464,597 = 29.4% of securities held outright.
How quantitative tightening worked, and how it ended
Quantitative tightening, or QT, never meant selling bonds. When a security the Fed owned matured or paid down principal, the Fed simply did not replace all of it. The FOMC set a monthly cap on how much could roll off; anything above the cap was reinvested.
Fact
The caps, in the Fed's own announcements
The plan of May 4, 2022 set the Treasury cap at $30 billion a month, rising to $60 billion after three months, and the agency debt and mortgage-backed securities cap at $17.5 billion, rising to $35 billion. On May 1, 2024 the Committee said that beginning in June it would cut the Treasury cap “from $60 billion to $25 billion”, keeping the mortgage cap at $35 billion. On March 19, 2025 it said that beginning in April it would cut the Treasury cap “from $25 billion to $5 billion”. On October 29, 2025 it “decided to conclude the reduction of its aggregate securities holdings on December 1.”
The plan of May 4, 2022 set the Treasury cap at $30 billion a month, rising to $60 billion after three months, and the agency debt and mortgage-backed securities cap at $17.5 billion, rising to $35 billion. On May 1, 2024 the Committee said that beginning in June it would cut the Treasury cap “from $60 billion to $25 billion”, keeping the mortgage cap at $35 billion. On March 19, 2025 it said that beginning in April it would cut the Treasury cap “from $25 billion to $5 billion”. On October 29, 2025 it “decided to conclude the reduction of its aggregate securities holdings on December 1.”
May 4, 2022
Runoff plan: caps of $30bn Treasuries, $17.5bn agency, doubling after three months
Jun 2022
Runoff begins
Jun 2024
Treasury cap cut from $60bn to $25bn
Apr 2025
Treasury cap cut from $25bn to $5bn
Dec 1, 2025
Runoff ends; mortgage principal reinvested in bills
Dec 10, 2025
FOMC says reserves are ample; begins buying shorter-term Treasuries as needed
Data
Holdings fell more than $2.2 trillion during runoff
The Fed's Policy Normalization page states that since June 2022 “total securities holdings declined by more than $2.2 trillion.” Governor Christopher Waller described the balance sheet's high point as “nearly $9 trillion in early 2022” in a speech on July 10, 2025.
The Fed's Policy Normalization page states that since June 2022 “total securities holdings declined by more than $2.2 trillion.” Governor Christopher Waller described the balance sheet's high point as “nearly $9 trillion in early 2022” in a speech on July 10, 2025.
Wealth Signal calculation
Against the week of April 13, 2022, assets are 24.8% smaller
The H.4.1 of April 14, 2022 showed total assets of $8,965,487 million on Wednesday, April 13, 2022. Against September 30, 2026: 8,965,487 − 6,743,031 = $2,222,456 million lower, or 2,222,456 ÷ 8,965,487 = 24.8%. Securities held outright fell from $8,504,586 million to $6,464,597 million, a drop of $2,039,989 million.
The H.4.1 of April 14, 2022 showed total assets of $8,965,487 million on Wednesday, April 13, 2022. Against September 30, 2026: 8,965,487 − 6,743,031 = $2,222,456 million lower, or 2,222,456 ÷ 8,965,487 = 24.8%. Securities held outright fell from $8,504,586 million to $6,464,597 million, a drop of $2,039,989 million.
The instructions in force are in the implementation note issued with the September 16, 2026 decision. Effective September 17, the Committee directs the New York Fed's Desk to:
When appropriate, increase the System Open Market Account holdings of securities through purchases of Treasury bills and, if needed, other Treasury securities with remaining maturities of 3 years or less to maintain an ample level of reserves. Roll over at auction all principal payments from the Federal Reserve's holdings of Treasury securities. Reinvest all principal payments from the Federal Reserve's holdings of agency securities into Treasury bills.Federal Reserve, Implementation Note issued September 16, 2026
So interest-rate policy and balance-sheet policy have been separated. The funds rate is steered with administered rates: the same note raised the interest rate paid on reserve balances to 3.90% and set the overnight reverse repo offering rate at 3.75%. The balance sheet is sized to keep reserves “ample”, which is why it can grow while rates rise.
Reserves and reverse repo, in plain English
Both items sit on the liability side of the Fed's balance sheet. They are money the Fed owes, and they are where the cash created by its past bond buying ended up.
- Reserve balances are deposits that banks keep in their accounts at the Fed. Banks earn the interest rate on reserve balances, 3.90% from September 17, 2026. The week-average level was $2,948,090 million in the week to September 30, 2026.
- Overnight reverse repos are for institutions that cannot hold reserves or earn that rate. The New York Fed lists the counterparties as “primary dealers, banks, money market mutual funds, and government sponsored enterprises.” The Fed takes their cash overnight and lends them a security as collateral, at an offering rate of 3.75% and up to $160 billion per counterparty per day.
- The link: the New York Fed says a reverse repo “temporarily reduces the supply of reserve balances in the banking system.” Cash parked in the facility is cash that is not sitting in bank reserves.
Wealth Signal calculation
Reverse repo shrank further than reserves during runoff
On the Wednesday figures in the H.4.1 releases of April 14, 2022 and October 1, 2026, reverse repurchase agreements fell from $2,070,332 million to $361,883 million, a drop of $1,708,449 million. Reserve balances fell from $3,793,317 million to $2,881,686 million, a drop of $911,631 million.
On the Wednesday figures in the H.4.1 releases of April 14, 2022 and October 1, 2026, reverse repurchase agreements fell from $2,070,332 million to $361,883 million, a drop of $1,708,449 million. Reserve balances fell from $3,793,317 million to $2,881,686 million, a drop of $911,631 million.
Interpretation
The facility acted as a buffer for bank reserves
Runoff drained cash from the system, and most of the drain came out of the reverse repo facility rather than out of banks' reserves. Other liabilities moved too, notably the Treasury's account at the Fed (week average $948,674 million, up $143,535 million on the year), so the two changes above do not add up to the runoff by themselves. The “others” reverse repo line, which excludes foreign official accounts, averaged $3,742 million in the week to September 30, 2026. In October 2025 Chair Jerome Powell said balances in the facility “have declined to minimal levels”. With that buffer close to empty, further shrinkage would have come directly out of reserves, which is the setting in which the FOMC stopped runoff and began buying bills.
Runoff drained cash from the system, and most of the drain came out of the reverse repo facility rather than out of banks' reserves. Other liabilities moved too, notably the Treasury's account at the Fed (week average $948,674 million, up $143,535 million on the year), so the two changes above do not add up to the runoff by themselves. The “others” reverse repo line, which excludes foreign official accounts, averaged $3,742 million in the week to September 30, 2026. In October 2025 Chair Jerome Powell said balances in the facility “have declined to minimal levels”. With that buffer close to empty, further shrinkage would have come directly out of reserves, which is the setting in which the FOMC stopped runoff and began buying bills.
Why the balance sheet matters to long-term rates
The Fed's own explanation of the mechanism turns on supply and demand for long-dated bonds. Governor Waller, speaking on July 10, 2025:
By increasing the demand for long-dated securities, the Fed drives up the price and drives down the yield on those securities. By lowering longer-term yields the Fed is able to loosen financing conditions to stimulate aggregate demand.Governor Christopher J. Waller, “Demystifying the Federal Reserve's Balance Sheet”, July 10, 2025
Runoff works the same way in reverse. A Fed staff note of February 2, 2026 describes balance sheet reduction as increasing the supply of longer-term securities to the public and “putting upward pressure on longer-term interest rates.”
Interpretation
Bigger is not the same as easier
Total assets rose over the year, but what the Fed is adding is Treasury bills and, if needed, Treasuries maturing within three years, while its mortgage bonds keep paying down and are not replaced with more mortgage bonds. On the Waller mechanism, it is the long-dated holdings that bear on long-term yields. Those are still shrinking, even as the headline total grows. The 10-year Treasury yield was 5.00% on September 15, 2026; this piece does not attempt to say how much of that level the balance sheet explains.
Total assets rose over the year, but what the Fed is adding is Treasury bills and, if needed, Treasuries maturing within three years, while its mortgage bonds keep paying down and are not replaced with more mortgage bonds. On the Waller mechanism, it is the long-dated holdings that bear on long-term yields. Those are still shrinking, even as the headline total grows. The 10-year Treasury yield was 5.00% on September 15, 2026; this piece does not attempt to say how much of that level the balance sheet explains.
What it means for your money
Three mechanisms connect this table to a household budget. None of them is a prediction.
- Mortgages. Every dollar of mortgage-backed securities the Fed does not replace has to be held by a private investor instead. Over the year to September 30, 2026 that was $187,894 million on the Wednesday figures. The 30-year fixed rate in Freddie Mac's survey was 6.95% in the week of September 17, 2026; the spread piece explains how mortgage rates relate to Treasury yields.
- Cash in money market funds. The reverse repo offering rate of 3.75% is a rate the Fed pays funds directly. It is one of the anchors under what a government money fund can earn overnight, alongside Treasury bills.
- Long-term borrowing generally. On the Fed's own account, its long-dated holdings influence long-term Treasury yields, which are the base for many fixed-rate loans. The size of the Fed's portfolio is a second policy lever beside the funds rate, and the two can point in different directions.
The arithmetic of the last point is visible in one line of the release: the Fed's mortgage holdings are $187,894 million smaller than a year earlier while its bill holdings are $364,718 million larger. A household reading only the total would miss the change in composition.
This piece does not claim that the balance sheet's growth is a policy easing, that it explains any particular level of mortgage rates or the 10-year yield, or what the FOMC will decide on October 27–28, 2026. It is not a forecast. The 2022 comparison uses the Wednesday of April 13, 2022 as reported in that week's H.4.1; the Fed's materials cited here describe the high point only as “nearly $9 trillion in early 2022”, and this piece does not assert a precise peak date. Weekly figures are subject to quarter-end and Treasury cash-flow swings.
Sources
- H.4.1 Factors Affecting Reserve Balances, October 1, 2026 (week ended September 30, 2026)Board of Governors of the Federal Reserve System · Oct 4, 2026 · Primary source
- H.4.1 Factors Affecting Reserve Balances, Thursday, April 14, 2022Board of Governors of the Federal Reserve System · Oct 4, 2026 · Primary source
- Implementation Note issued September 16, 2026Board of Governors of the Federal Reserve System · Oct 4, 2026 · Primary source
- FOMC statement, September 16, 2026Federal Reserve Board · Sep 16, 2026 · Primary source
- Plans for Reducing the Size of the Federal Reserve's Balance Sheet, May 4, 2022Board of Governors of the Federal Reserve System · Oct 4, 2026 · Primary source
- Federal Reserve issues FOMC statement, May 1, 2024Board of Governors of the Federal Reserve System · Oct 4, 2026 · Primary source
- Federal Reserve issues FOMC statement, March 19, 2025Board of Governors of the Federal Reserve System · Oct 4, 2026 · Primary source
- Federal Reserve issues FOMC statement, October 29, 2025Board of Governors of the Federal Reserve System · Oct 4, 2026 · Primary source
- Policy NormalizationBoard of Governors of the Federal Reserve System · Oct 4, 2026 · Primary source
- Federal Reserve Balance Sheet Developments, November 2025Board of Governors of the Federal Reserve System · Oct 4, 2026 · Primary source
- Federal Reserve Balance Sheet Developments, May 2026 (published May 28, 2026)Board of Governors of the Federal Reserve System · Oct 4, 2026 · Primary source
- Demystifying the Federal Reserve's Balance Sheet, speech by Governor Christopher J. Waller, July 10, 2025Board of Governors of the Federal Reserve System · Oct 4, 2026 · Primary source
- Understanding the Fed's Balance Sheet, speech by Chair Jerome H. Powell, October 14, 2025Board of Governors of the Federal Reserve System · Oct 4, 2026 · Primary source
- A Decomposition of Balance Sheet Reduction, FEDS Notes, February 2, 2026 (Eyal, Na and Skaperdas)Board of Governors of the Federal Reserve System · Oct 4, 2026 · Primary source
- Repo and Reverse Repo AgreementsFederal Reserve Bank of New York · Oct 4, 2026 · Primary source
- Implementing Monetary Policy in an “Ample-Reserves” Regime: The Basics (Note 1 of 3), FEDS Notes, July 1, 2020Board of Governors of the Federal Reserve System · Oct 4, 2026 · Primary source
- Calendar: October 2026Board of Governors of the Federal Reserve System · Oct 4, 2026 · Primary source
- Meeting calendars and information — 2026 FOMC MeetingsBoard of Governors of the Federal Reserve System · Sep 28, 2026 · Primary source
- 10-Year Treasury Constant Maturity Rate (DGS10), observation of September 15, 2026U.S. Department of the Treasury via FRED · Sep 15, 2026 · Primary source
- Primary Mortgage Market Survey, week of September 17, 2026Freddie Mac · Sep 17, 2026 · Primary source
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