The Fed’s $6.75 Trillion Balance Sheet Is Growing Again — Should Americans Be Worried?
The Fed is quietly buying again, but it is not the 2020-style money printing you remember. The real squeeze lands on anyone financing a home, and two upcoming signals could reveal whether this plumbing fix turns into something bigger.
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The Federal Reserve’s balance sheet grew by roughly $2.5 billion in the week ended November 4, reaching $6.748 trillion. One week’s gain is small. Total assets bottomed at $6.536 trillion on December 3, 2025 and have since rose about $212 billion, The Kobeissi Letter reported. After years of shrinking, the Fed is buying again.
Many households hear that and think of money printing and higher grocery bills, but the real pressure falls more directly on anyone trying to finance a home.
Treasuries Are In and Mortgage Bonds Are Out
The Fed holds about $4.58 trillion in Treasury securities. That is up roughly $390 billion since December 2025 and the highest level since March 2024. Mortgage-backed securities went the other way. They fell about $170 billion to $1.88 trillion, the lowest since June 2020.
The swap is calculated. Each month, the New York Fed’s trading desk runs reserve management purchases on top of its reinvestment purchases. The aim is to keep enough reserves in the banking system so overnight funding markets keep working smoothly. That is plumbing work. Short-term liquidity operations do little to push down the long-term borrowing costs that quantitative easing targeted in 2020.
Even so, the balance sheet is enormous. At $6.75 trillion, the Fed holds about $2.99 trillion more than before the pandemic, roughly 80% larger. It is still well below the $8.97 trillion peak of April 13, 2022.
Homebuyers Absorb the Cost First
Private investors must step in. Every dollar of mortgage bonds the Fed lets mature is a dollar they must buy, and they demand higher yields to do it. That adds to an already harsh rate environment. The 10-year Treasury yield, the benchmark for mortgage rates, hit 5.31% on October 5, a five-year high. It had fell to 4.84% by November 5, still well above the 4.17% of a year earlier. The Fed’s Treasury buying gives homebuyers little relief while it keeps selling down its mortgage book.
Inflation Is the Real Risk
The broader numbers argue against panic. M2 money supply reached $23.41 trillion in September, up 5.7% from a year earlier. That falls inside the 5% to 7% range considered normal. Unemployment stood at 4.1% in October. The upper bound of the federal funds rate is 4.00%, unchanged from a year ago.
Inflation is the weak point. The core Personal Consumption Expenditures index, the Fed’s preferred inflation gauge, rose 3.1% in the year through September. It remains well above the 2% target. A central bank that adds assets while core inflation runs above 3% will face questions about whether it is quietly fell. Bond investors set mortgage and car-loan rates, and they price that doubt.
Two Signals That Would Mean Stimulus
Americans have a bigger concern than 2020-style money printing. Slow balance-sheet growth, coupled with sticky inflation, undermines the Fed’s credibility and keeps long-term rates high.
Two signals would show this switching from plumbing to stimulus, and the first is a larger monthly purchase schedule from the New York Fed, published each month. Second, any move to buy longer-dated Treasuries instead of short-term bills. Read either one against the October core PCE report. Expect mortgage rates to follow. If purchases grow while core inflation holds above 3%, the 10-year yield and mortgage rates will move back toward October’s highs.
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After two decades of patrolling the dark corners of suburbia as a police officer, Rich Duprey hung up his badge and gun to begin writing full time about stocks and investing. For the past 20 years, he’s been cruising the markets looking for companies to lock up as long-term holdings in a portfolio while writing extensively on the broad sectors of consumer goods, technology, and industrials. Because his experience isn’t from the typical financial analyst track, Rich is able to break down complex topics into understandable and useful action points for the average investor. His writings have appeared on The Motley Fool, InvestorPlace, Yahoo! Finance, Money Morning, and, of course, 24/7 Wall St. He has been featured in both U.S. and international publications, including MarketWatch, Financial Times, Forbes, Fast Company, and USA Today.
