The decline in the Fed’s balance sheet has been historic: The Fed’s total assets as a % of nominal GDP have fallen to 21.6%, the lowest since Q4 2020. This also matches the level seen in Q3 2013 during the Fed’s 3rd QE program. The Fed now has the lowest Asset-to-GDP ratio among major central banks, behind the UK’s ~25%, the Euro Area’s ~40%, and Japan’s ~110%. Since the 2022 peak, this ratio has fallen -14 points, marking the largest drop on record. In nominal terms, total assets have declined by -2.37 trillion during this period, to 6.60 trillion, the lowest since April 2020. The Fed’s balance sheet is shrinking.(The Kobeissi Letter)