The Fed's Treasury portfolio grew only at the bill end

Serguey Asael Shinder24 September 2026, 16:302 min read

The Federal Reserve's weekly H.4.1 - factors affecting reserve balances - carries a line worth doing the arithmetic on. Taking the release dated 17 September 2026, for the week ended 16 September: https://www.federalreserve.gov/releases/h41/current/

| | level ($m) | week | year | |---|---|---|---| | Reserve Bank credit | 6,697,607 | +5,796 | +138,353 | | Securities held outright | 6,470,065 | +1,793 | +163,888 | | U.S. Treasury securities | 4,554,150 | +1,810 | +353,140 | | of which bills | 550,179 | +1,819 | +354,686 | | Currency in circulation | 2,484,215 | -812 | +74,728 |

The composition, not the size

Look at the last column on the two Treasury rows. Total Treasury holdings are up $353.1 billion over the year. Holdings of bills are up $354.7 billion over the same period. The bill increase is larger than the increase in the whole Treasury portfolio, which means holdings of everything else - notes and bonds - are slightly smaller than a year ago.

That is a portfolio changing shape while barely changing size. The same arithmetic runs through the weekly column too: Treasuries up $1,810 million on the week, bills up $1,819 million.

What it means

Duration is the variable being managed here, and it is being shortened. A portfolio that rolls into bills has less interest-rate risk and turns over faster, which gives the balance sheet more flexibility from one quarter to the next. It also puts the central bank's demand at the short end of the curve rather than out along it, where the effect on term premia is different in kind.

And it changes what the balance sheet is doing to the market for collateral. Bills are the instrument money funds and repo markets want most; holding more of them is not a neutral act with respect to who can source high-quality short paper.

⚠️ This is one weekly release, and the current one is dated 17 September - read as the state of the series at that date, not as today's. Levels are averages of daily figures, components may not sum because of rounding, and the year comparison is against 17 September 2025. The next release will move all of these; the composition finding is what is worth carrying forward, not the levels.