Two Weeks After the Hike: The Fed's Bill Holdings Are Up $361 Billion in a Year, Treasury Lifted Six Bill Sizes, and Quarter-End Drew Only $1.2 Billion From the Standing Repo Facility

by Tomas Ferreira · October 2, 2026

Markets Reporter, US Market Current

The Federal Reserve's weekly balance sheet, released Oct. 1, shows the central bank holding $556.6 billion of Treasury bills on average in the week ended Sept. 30, up $361.1 billion from a year earlier, as it continues to buy bills under the directive the Federal Open Market Committee issued at its Sept. 16 meeting. Total securities held outright averaged $6.46 trillion, up $174.5 billion over 12 months, with mortgage-backed securities down $186.1 billion to $1.90 trillion over the same span, according to the H.4.1 release.

The composition shift is the point. The FOMC's implementation note of Sept. 16 directs the New York Fed's Open Market 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," and to "reinvest all principal payments from the Federal Reserve's holdings of agency securities into Treasury bills." The H.4.1 shows the result: bills up, MBS down, nominal notes and bonds up only $37.4 billion on the year.

Reserve balances with Federal Reserve Banks averaged $2,948.1 billion in the latest week, up $17.9 billion from the prior week but $18.0 billion lower than a year earlier. On Wednesday, Sept. 30 itself, the quarter-end day, reserves stood at $2,881.7 billion, about $66 billion below the weekly average on our arithmetic ($2,948.1 billion minus $2,881.7 billion), on a day when the H.4.1 shows the Treasury's account and reverse repo balances both above their weekly averages.

The Treasury General Account averaged $948.7 billion for the week, down $28.4 billion from the week before but $143.5 billion higher than a year ago; the Wednesday level was $984.0 billion. The size of that balance matters for bank reserves because every dollar Treasury holds at the Fed is a dollar not held by banks, which is why the Fed's bill purchases and Treasury's bill issuance are now two sides of the same plumbing.

Treasury has been adding to the bill pile. TreasuryDirect's auction announcements show the 4-week bill offering raised to $100 billion for the Oct. 1 auction from $90 billion a week earlier, the 8-week bill to $95 billion from $85 billion, the 6-week bill to $95 billion for Oct. 6 from $85 billion the prior week and $75 billion the week before that, the 13-week bill to $95 billion from $92 billion, the 26-week bill to $82 billion from $79 billion, and the 17-week bill to $75 billion from $72 billion. A $54 billion 52-week bill was sold Sept. 29.

Most of those auctions cleared at rates above the new 3.75% to 4% policy range; the 4- and 8-week bills stopped inside it. Per TreasuryDirect results, the Oct. 1 4-week bill stopped at a 3.890% high discount rate with a 2.83 bid-to-cover; the 8-week at 3.990%; the Sept. 30 17-week at 4.115%; the Sept. 28 13-week at 4.110% and 26-week at 4.285%; and the 52-week at 4.400% with a 3.07 bid-to-cover. On the coupon side, the Sept. 22 two-year note stopped at 4.787%, the Sept. 23 five-year at 5.033%, and the Sept. 24 seven-year at 5.085%. Treasury announced Oct. 1 a $58 billion three-year note for Oct. 6, a $39 billion reopened 10-year for Oct. 7 and a $22 billion reopened 30-year for Oct. 8.

The money-market backdrop is the FOMC's Sept. 16 decision, which raised the federal funds target range by a quarter point to 3.75% to 4% on a 12-0 vote. The Board set interest on reserve balances at 3.90% and the primary credit rate at 4.0%, and the FOMC's directive set the standing overnight repo rate at 4.0% and the overnight reverse repo offering rate at 3.75% with a per-counterparty limit of $160 billion per day, all effective Sept. 17. The New York Fed's reference-rate data show the effective federal funds rate stepping from 3.63% on Sept. 16 to 3.88% on Sept. 17 and holding there through Oct. 1.

Quarter-end passed without stress by the Fed's own measures. The Secured Overnight Financing Rate printed 3.90% on Sept. 30, with the 99th-percentile rate at 3.99%, just under the 4.00% standing repo facility rate; on Oct. 1 SOFR eased to 3.87% on $3.07 trillion of volume, per the New York Fed. The Standing Repo Facility, which offers full allotment at 4.0%, took $1.2 billion of Treasury collateral in one of its two Sept. 30 operations and essentially nothing on other days in the fortnight, the Desk's results show.

The reverse side of the balance sheet absorbed the usual quarter-end cash. Overnight reverse repo take-up jumped to $11.446 billion on Sept. 29 across 10 counterparties and $11.539 billion on Sept. 30 across 18, then fell back to $350 million on Oct. 1, according to New York Fed operation results. The H.4.1 confirms the pattern: "Others" reverse repos averaged $3.7 billion for the week but stood at $11.5 billion on Wednesday. Discount window primary credit averaged $6.9 billion for the week and was $8.7 billion on Wednesday.

That last line connects to a speech Vice Chair Philip Jefferson gave at the New York Fed's Treasury Market Conference on Sept. 22. He said the Fed had "recently seen more use of the discount window amid periods associated with temporary upward pressure on money market rates, such as those observed at quarter-ends," and said the window supports policy implementation by "complementing the standing repo operations in relieving funding market pressures." He also said institutions holding Treasuries in Fedwire accounts "can quickly transfer them to their discount window pledge account even late in the day."

On the policy path, the two most substantive Board speeches since the meeting lean the same way without committing. Governor Michael Barr told the Detroit Economic Club on Sept. 29 that "in my base case, further policy adjustments are likely to be needed to ensure inflation comes down to target in a timely fashion," adding that he counts "only two months of data consistent with 2 percent core PCE inflation over the past 20 months." Jefferson, on Oct. 1, said that since the September meeting "yields across the term structure have increased further," and that "my colleagues and I will need to come to our own judgment, which may take more time."

The September Summary of Economic Projections, released with the statement, carries a median federal funds rate of 4.1% for the end of 2026 and 4.1% for 2027, up from 3.8% and 3.6% in the June projections, with a 2026 central tendency of 4.1% to 4.4%. The median sits above the current 3.75% to 4% range. The Fed's press-release feed shows no monetary policy release since Sept. 16; the Board's items in the interval have been regulatory, including a Sept. 30 final rule on stress-test transparency and a Sept. 24 request for comment on a payment-stablecoin framework.

What is not yet available: the minutes of the Sept. 15-16 meeting, which were not on the Board's release feed as of Oct. 2; the Treasury's next quarterly refunding statement, which sets coupon auction sizes for the coming quarter; and the next weekly H.4.1, which will cover the week that includes the Oct. 1 settlements. The question those documents will answer is whether the quarter-end reserve dip to $2.88 trillion was a one-day event or the start of a lower range as Treasury's cash balance and bill supply both climb.