The Fed’s record $3.1 trillion balance sheet includes $1.74 trillion of Treasuries, $1.03 trillion of mortgage-backed securities and $74.6 billion of Federal agency debt, as of Feb. 20. In 2007, prior to the financial crisis, the total balance sheet was less than $900 billion.
In other remarks today, Bernanke said recent increases in some interest rates may signal the economy is gaining vigor.
“The fact that interest rates have gone up a bit is actually indicative of a stronger economy,” he said.
The world’s largest economy has shown signs that it will resume growth after gross domestic product unexpectedly shrank 0.1 percent in the fourth quarter. Reports today showed that orders for U.S. durable goods excluding transportation gear jumped in January by the most in a year and contracts to buy previously owned homes climbed more than forecast.
“We are getting some traction in the housing market, in automobiles and other durable goods” and to “some extent in investment” and commercial real estate, Bernanke said.
U.S. stocks rose, sending the Standard & Poor’s 500 Index higher for a second day, amid economic optimism after the better-than-estimated housing and durable goods data. The S&P 500 climbed 1.3 percent to 1,516.16 at 2:31 p.m. today.
Fed policies also helped to lift the index to a five-year high on Feb. 19, giving support to consumer spending. Bernanke said yesterday in testimony that U.S. share prices don’t appear to be overvalued.
Some interest rates have risen in recent months. The rate on a fixed 30-year mortgage climbed to 3.56 percent in the week ended Feb. 21 from a low of 3.31 percent on Nov. 22, according to data from Freddie Mac.
The yield on the 10-year Treasury note was 1.8 percent at about 2:31 p.m. in New York, up from a record low of 1.379 percent on July 25.