EndGame Macro
How a Population Shock Drove Rents Higher And What Happens Next
From 2021 to 2024, the U.S. saw an unusually large population shock where roughly 6 million more foreign born residents in a very short window. Almost all of that inflow showed up in the rental market. About 9 out of 10 new immigrant households rented, which is why they accounted for roughly two thirds of total rental demand growth nationwide and in places like California and New York, essentially all of it. This wasn’t just a long term lease story either. New arrivals also leaned on short term rentals at first with extended stays, Airbnb style units, and informal sublets which quietly tightened supply across both long term and short term markets at the same time.
Layer on top of that a housing market already short 4 to 7 million units in high demand areas and a surge in investor purchases converting homes into rentals, and you get the rent inflation we just lived through. Demand spiked faster than supply could respond, so prices did what prices always do under constraint.
What’s Changed Now
That demand impulse is fading. Net immigration has slowed, deportations and self departures picked up in 2025, and for the first time in decades the total immigrant population actually declined. At the same time, new multifamily supply finally hit the market. The result is visible in the data with national rents rolling over, month to month declines, and year over year prices slipping.
This is why rent is softening even though affordability still feels bad. The pressure came off the demand side before wages or household balance sheets really healed. Short term rentals are feeling it too, especially in high immigration metros…occupancy rates are down, nightly pricing is softer, and marginal hosts are suddenly competing for fewer renters.
The Bigger Picture
The rent surge wasn’t just greedy landlords or pure inflation. It was a demographic shock colliding with a supply starved system. Now that the shock is reversing, rents are easing but that doesn’t mean housing is healthy. It means one temporary support beam has been removed.
Going forward, softer rents help headline inflation, but they also expose how dependent recent price stability was on population inflows. If job growth cools or household stress rises at the same time, landlords lose pricing power quickly. That’s the risk now…not a rent crash everywhere, but a quiet shift from shortage panic to competition, especially in the same cities that led the surge on the way up.
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How a Population Shock Drove Rents Higher And What Happens Next
From 2021 to 2024, the U.S. saw an unusually large population shock where roughly 6 million more foreign born residents in a very short window. Almost all of that inflow showed up in the rental market. About 9 out of 10 new immigrant households rented, which is why they accounted for roughly two thirds of total rental demand growth nationwide and in places like California and New York, essentially all of it. This wasn’t just a long term lease story either. New arrivals also leaned on short term rentals at first with extended stays, Airbnb style units, and informal sublets which quietly tightened supply across both long term and short term markets at the same time.
Layer on top of that a housing market already short 4 to 7 million units in high demand areas and a surge in investor purchases converting homes into rentals, and you get the rent inflation we just lived through. Demand spiked faster than supply could respond, so prices did what prices always do under constraint.
What’s Changed Now
That demand impulse is fading. Net immigration has slowed, deportations and self departures picked up in 2025, and for the first time in decades the total immigrant population actually declined. At the same time, new multifamily supply finally hit the market. The result is visible in the data with national rents rolling over, month to month declines, and year over year prices slipping.
This is why rent is softening even though affordability still feels bad. The pressure came off the demand side before wages or household balance sheets really healed. Short term rentals are feeling it too, especially in high immigration metros…occupancy rates are down, nightly pricing is softer, and marginal hosts are suddenly competing for fewer renters.
The Bigger Picture
The rent surge wasn’t just greedy landlords or pure inflation. It was a demographic shock colliding with a supply starved system. Now that the shock is reversing, rents are easing but that doesn’t mean housing is healthy. It means one temporary support beam has been removed.
Going forward, softer rents help headline inflation, but they also expose how dependent recent price stability was on population inflows. If job growth cools or household stress rises at the same time, landlords lose pricing power quickly. That’s the risk now…not a rent crash everywhere, but a quiet shift from shortage panic to competition, especially in the same cities that led the surge on the way up.
BREAKING: Foreign-born population accounted for more than 60% of rental demand growth in the U.S., per FOX. tweet
X (formerly Twitter)
Leading Report (@LeadingReport) on X
BREAKING: Foreign-born population accounted for more than 60% of rental demand growth in the U.S., per FOX.
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#NewYear2026 plans
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i'm gonna be so productive today
also me: grok remove the dress https://t.co/JWBYGBgCoj tweet
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Why are you still single? You don't have a girlfriend?
me in my prime: https://t.co/CSUmyWxJIL
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Why are you still single? You don't have a girlfriend?
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Everyone's out enjoying New Year's Eve, and you're gooning in your room with Grok https://t.co/5WGP7Ef15F
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EndGame Macro
H.4.1 Signals: Late Cycle Liquidity, Calm on the Surface, Tightening Underneath
Total Fed assets now sit at $6.58 trillion, up $24.4 billion week over week, but still down about $305 billion from a year ago. QT hasn’t reversed outright, but it has clearly changed character.
The most important shift is where the Fed is holding assets…
• Treasuries: $4.23T, up $23.4B WoW, but down $81B YoY
• Mortgage backed securities: $2.05T, down $2.9B WoW and nearly $195B YoY
QT is no longer about shrinking the balance sheet aggressively. It’s about reshaping it. The Fed is quietly moving toward shorter duration Treasuries while letting MBS continue to roll off.
That matters more than the headline balance sheet number.
A Quiet but Important Detail: Bills Are Doing the Work
Almost the entire weekly increase in Treasuries came from T-bills, which rose $23.1B in a single week. Notes and bonds didn’t change at all.
This isn’t random. Bills…
• Carry less duration risk
• Reprice faster at higher rates
• Generate income more quickly
In plain English the Fed is managing interest rate risk and cash flow, not easing financial conditions.
Liquidity Is Still There But the Shock Absorber Is Gone
Reserve balances ended the week at $2.96T, down $3.5B WoW and down nearly $292B from a year ago.
On its own, that weekly move is small. The issue is what’s no longer there to cushion future drains.
Reverse repos the old pressure release valve have collapsed…
• Total RRP: $327B, down $184B YoY
• Of that, $322B belongs to foreign official accounts
• Only $4.7B remains in domestic “other” usage
That means the domestic ON RRP facility is effectively empty.
So going forward…
• Treasury cash builds
• Currency demand spikes
• Deposits shift
…and those pressures hit reserves directly, with much less buffer than in 2022–2023.
This doesn’t cause stress by itself. It raises sensitivity.
Discount Window Use: Not a Crisis, But Not Nothing
Total Fed loans are still small $9.2B but context matters…
• Loans are up $301M WoW
• Up $6.9B year over year
• Nearly all of it is primary credit (discount window)
That’s not panic level borrowing. But it is a sign that some institutions are choosing the Fed over private markets at the margin.
Historically, the signal isn’t the level, it’s persistence. If this fades after year end, it’s noise. If it keeps climbing, it becomes information.
Liquidity Swaps: A Flicker, Not a Fire
Central bank dollar swaps rose to $481M, up $392M WoW.
In absolute terms, this is tiny. In directional terms, it’s worth logging.
When swaps move off zero, it usually reflects localized offshore dollar tightness, not global stress. This is a watch item, not a warning siren.
The Accounting Reality Everyone Ignores
Buried in the liabilities is a line most people wave away…
Earnings remittances due to the U.S. Treasury: –$242.1B
That negative number is the Fed’s deferred asset, the accumulated shortfall from paying high interest on reserves while holding a low coupon bond portfolio.
This doesn’t impair the Fed’s ability to operate. But it does tell you…
• High rates are expensive
• Time matters
• The Fed is incentivized to manage income carefully
That helps explain the shift toward bills and balance sheet stabilization.
So What’s the Actual Risk Signal?
Several things narrow the margin for error…
• Reserves are lower YoY and more exposed
• The ON RRP buffer is gone
• Discount window usage is rising modestly
• Liquidity management is becoming more deliberate, not looser
At the same time…
• The yield curve is positive
• Emergency facilities are quiet
• Asset composition remains conservative
This is late cycle balance sheet behavior, not crisis behavior.
Bottom Line
Recession risk implied by the balance sheet alone will be very dependent on how labor, Treasury issuance, and funding markets evolve from here.
Interactive guide to our weekly #Balanc[...]
H.4.1 Signals: Late Cycle Liquidity, Calm on the Surface, Tightening Underneath
Total Fed assets now sit at $6.58 trillion, up $24.4 billion week over week, but still down about $305 billion from a year ago. QT hasn’t reversed outright, but it has clearly changed character.
The most important shift is where the Fed is holding assets…
• Treasuries: $4.23T, up $23.4B WoW, but down $81B YoY
• Mortgage backed securities: $2.05T, down $2.9B WoW and nearly $195B YoY
QT is no longer about shrinking the balance sheet aggressively. It’s about reshaping it. The Fed is quietly moving toward shorter duration Treasuries while letting MBS continue to roll off.
That matters more than the headline balance sheet number.
A Quiet but Important Detail: Bills Are Doing the Work
Almost the entire weekly increase in Treasuries came from T-bills, which rose $23.1B in a single week. Notes and bonds didn’t change at all.
This isn’t random. Bills…
• Carry less duration risk
• Reprice faster at higher rates
• Generate income more quickly
In plain English the Fed is managing interest rate risk and cash flow, not easing financial conditions.
Liquidity Is Still There But the Shock Absorber Is Gone
Reserve balances ended the week at $2.96T, down $3.5B WoW and down nearly $292B from a year ago.
On its own, that weekly move is small. The issue is what’s no longer there to cushion future drains.
Reverse repos the old pressure release valve have collapsed…
• Total RRP: $327B, down $184B YoY
• Of that, $322B belongs to foreign official accounts
• Only $4.7B remains in domestic “other” usage
That means the domestic ON RRP facility is effectively empty.
So going forward…
• Treasury cash builds
• Currency demand spikes
• Deposits shift
…and those pressures hit reserves directly, with much less buffer than in 2022–2023.
This doesn’t cause stress by itself. It raises sensitivity.
Discount Window Use: Not a Crisis, But Not Nothing
Total Fed loans are still small $9.2B but context matters…
• Loans are up $301M WoW
• Up $6.9B year over year
• Nearly all of it is primary credit (discount window)
That’s not panic level borrowing. But it is a sign that some institutions are choosing the Fed over private markets at the margin.
Historically, the signal isn’t the level, it’s persistence. If this fades after year end, it’s noise. If it keeps climbing, it becomes information.
Liquidity Swaps: A Flicker, Not a Fire
Central bank dollar swaps rose to $481M, up $392M WoW.
In absolute terms, this is tiny. In directional terms, it’s worth logging.
When swaps move off zero, it usually reflects localized offshore dollar tightness, not global stress. This is a watch item, not a warning siren.
The Accounting Reality Everyone Ignores
Buried in the liabilities is a line most people wave away…
Earnings remittances due to the U.S. Treasury: –$242.1B
That negative number is the Fed’s deferred asset, the accumulated shortfall from paying high interest on reserves while holding a low coupon bond portfolio.
This doesn’t impair the Fed’s ability to operate. But it does tell you…
• High rates are expensive
• Time matters
• The Fed is incentivized to manage income carefully
That helps explain the shift toward bills and balance sheet stabilization.
So What’s the Actual Risk Signal?
Several things narrow the margin for error…
• Reserves are lower YoY and more exposed
• The ON RRP buffer is gone
• Discount window usage is rising modestly
• Liquidity management is becoming more deliberate, not looser
At the same time…
• The yield curve is positive
• Emergency facilities are quiet
• Asset composition remains conservative
This is late cycle balance sheet behavior, not crisis behavior.
Bottom Line
Recession risk implied by the balance sheet alone will be very dependent on how labor, Treasury issuance, and funding markets evolve from here.
Interactive guide to our weekly #Balanc[...]
Offshore
EndGame Macro H.4.1 Signals: Late Cycle Liquidity, Calm on the Surface, Tightening Underneath Total Fed assets now sit at $6.58 trillion, up $24.4 billion week over week, but still down about $305 billion from a year ago. QT hasn’t reversed outright, but…
eSheet report: https://t.co/75xiVY33QW #FedData - Federal Reserve tweet
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