Definition
Everything the Fed owns, mostly Treasury and mortgage-backed bonds, and everything it owes, mostly the dollar bills in circulation and banks' deposits.
The story
When the Fed buys bonds, it pays with money it creates, and that money flows into the banking system. When it lets those bonds roll off, the money drains back out. The balance sheet is the scoreboard for how much the Fed has pumped in or pulled out.
Why markets watch it
Its size affects how much money is sloshing around the financial system.
Connects to
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms