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$270 Billion Of POMOs To Date Running Ahead Of Schedule
With ever increasing interest in the Fed's (in)direct monetization strategies, Zero Hedge is presenting detailed data highlighting the specific of all the 50 POMOs conducted to date. We are now compiling cost-basis information to determine what the cumulative hit to the Fed may have been as a result of price fluctuations of the repurchased Treasuries since issuance.
A chart of the cumulative POMO purchases versus the expected trendline through the program's termination in early October, demonstrates a slightly overzealous Fed, which at this rate of OMO purchases has enough dry powder to only last it through the second week of September. It seems QE for Treasuries will end some time in the next 20 days, whether the Fed likes it or not.
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" It seems QE for Treasuries will end some time in the next 20 days, whether the Fed likes it or not."
Very interesting. Shall we take bets as to what happens?
They will stop reporting purchases at $300B?
Will QE end with a bang or a whimper?
mushroom cloud.
Epic Failure
Unfortunately, it will end when the un-audited private-for-profit Federal Reserve decides it will end.
You mean Officially end TD?
Fact: "It will end in 20 days."
Fact :"That last fact is bullshit."
hahahah
Fact: a lot of people working at the Fed do not like the current policies
Fact: a lot of the afformentioned people would be able to see it if the Fed purchased more treasuries
Fact: some of them would spread the documents publicly through ZH, etc. or through the "mainstream" media.
If the Fed wants to continue the QE through purchases of treasuries it will not be able to do it without being noticed. Though I'm sure there are backdoor ways of continuing the QE that I don't know about.
Yes, some of which are purchasing MBS and agency debt.
bilge
One thing I have been contemplating is the shift from treasury purchases to CMBS. We know the direct mechanical impact of the treasury impacts. Do CMBS have a bigger impact since their is higher loan loss reserves associated with them since they are risky? Not sure of the mechanics of this but I would guess that these operations would impact velocity more than money supply. Any thoughts?
Ben in his recent statement at the hearing rather cryptically suggested a "fiscal" reponse to the commercial real estate problem. Nobody followed up on this. If only I had been there I would have asked what this might look like. A $3trillion appropriation given to Donald Trump?
Not that he wouldn't like to do it. Buy up CMBS's that is but it's a bridge too far. The universe is too small and the selection of winners and losers would be too easily ID'd.
I agree with the last statement especially
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It would be interesting to see the same break out of mortgage security purchases. Does the FED publish that?
Yup.
http://www.ny.frb.org/markets/mbs/
You need to look at net, not gross, purchases, because they do sell the front month to roll their purchases, etc.
I came across a similar comment while reading Dorsch ( http://www.marketoracle.co.uk/Article11862.html ) ...
“Maintaining the confidence of the financial markets requires that we begin planning now for the restoration of fiscal balance. Either cuts in spending or increases in taxes will be necessary to stabilize the fiscal situation. The Fed will not monetize the debt!” Bernanke’s pledge to stop the printing presses after August was a grand omission of Washington’s subservience to its paymasters in Beijing.
I always like to read for a game of "Where's Waldo?" Read a statement and determine what is missing. If it's a statement of parameters, like what won't be done, then read for what WILL be done. Monetization is verboten implying other outcomes like forced devalutation.
Not likely. So they stop propping up the market for their own spew and rates are 15% in a jiffy. Can't see them letting that happen.
The QE will be ended as Ben said. We will see what will happened after holiday season.
QE is not really ending when you still have ample capacity to purchase crappy agency MBS.
With an end to Treasury purchases, however, the Fed will lose control over the direction of the risk-free yield-- unless he's found a proxy to make purchases through the back door.
Never underestimate what Uncle Ben is doing... as criminal as it is, he's been pretty crafty so far.
Stevm30: Yes, Fed publishes details of both Agency and Agency MBS POMOs. See http://www.newyorkfed.org/markets/pomo_landing.html
I think more attention needs to be paid to the Fed's much larger purchases of RMBS's. Who are they buying from. At what price? How are those RMBS's performing? Gains? Losses?
They would be buying them from mostly the larger mortgage originators - WFC, JPM, BAC, etc.
You can get current prices on the FIT screen on bloomberg. FIT <go>
Historical prices you can guess at by looking at MTGEFNCL to see where par was on any given day. They don't disclose daily purchases, just weekly.
I suggest you send a FOIA request to the Fed asking those same questions-- and see what reaction you will get.
Perhaps you could forward it to Bloomberg and have them send it.
Your $270 billion total is gross purchases. There is $11.8 billion of Treasury POMOs which matured 3/15 - 8/25.
Are we counting the covert scheme where Bernanke prints money to buy agencies from foreign CBs who then buy treasuries with the Fed money?
In any case, the official figures will top $300b, no need to keep track. It's not what we don't know that will kill us, its what we know simply ain't true that would kill us all.
Great work, TD!
Who gives a rat's tail about POMOs? When the Fed quit posting TOMOs at the first of the year, they are hiding the elephant(TOMO) in the room and we are staring at a mouse (POMO).
TOMOs that roll every time are no different than a POMO. What is anyone's guess what the level of TOMOs is? One Trillion? Two Trillion? TALF alone is a quarter trill.
TOMO purchasess are not as liquid as POMO treasuries. This would (theoretically) prevent the TOMO beneficiaries from liquidity right off the bat.
Much more attention needs to be paid to the fed's RMBS purchases. These purchases dwarf the treasury purchases. The last article I read says that the fed now owns 15% of the market in RMBS. Where are they getting these RMBSs from? At what value? How about gains? Losses?
Any chance you can put together a graph of the Agency MBS POMOs? From august 13 to the 19th they purchased 25 billion of the stuff.
Q2 2009 comes with revisions again, so the runup in equities from 2005 appears to have been on profits that have been revised away. Now data shows profits peaked Q3 2006 and profits growth rates peaked Q1 2004. This is the same thing that happened in the late 1990s, so maybe it's a new way of producing statistics. It'd be laughable if it wasn't so terrible for investors that assumed the previous data was correct and remained invested.
Good point RE the TOMOs. Agree that we need to look at all the QE in whatever form. Probably best to look at it via the Fed balance sheet. Including the swap of Ts for more speculative paper, anywhere from 1.5 to 2T of effective QE has occurred.
Buying 1T+ of MBS is the bigger elephant. All roads seem to lead to devaluation. One morning, the President will announce a devaluation.
This is another Cash For Clunkers program that will likely see an extension
Credit weasling at the Federales laundromat is a shell game.
http://anonymousmonetarist.blogspot.com/2009/08/at-no-time-do-my-hands-leave-my-arms.html
$300B is all an illusion. The federal government has to sell $1.6T in new securities this year and $1.1T (at a minimum) next. Who, other than the Fed will be buying???
FDIC now insolvent.
Banks insolvent.
Most corporations will be unable to service debt, hence
bondholders will be severely impaired.
All cash flow derived from debt instruments will eventually fail and principal deeply discounted.
Dollar will be debauched further eroding any interest income
Demand for social services and increased stimulus will cause much greater QE/printing.
THE USA IS BANKRUPT; ITS ONLY RECOURSE IS DESTRUCTION OF THE CURRENCY; IT IS NO LONGER A VIABLE PRODUCER OF ANYTHING BUT FINANCIAL SERVICES AND WAR
Sovereign, state, municipality, corporate,private cascading defaults can only be ameliorated by the "extend and pretend", but the AUDIT and FOIC disclosure from the Fed will be a coffin nail.
Everyone knows it is govern by fiat now and in the future. The only ambush not universally expected is a bank holiday and immediate and deep step devaluation of the currency.
Unless this is anticipated and agreed among the world's nations, it could precipitate war or at least the end of global trade as we know it.
The USA is only transfer payments, subsidy, QE, social services, and covert debt default now.
Real economy will die except for those segments held within the scope of the above.
Brace,brace,brace. Global "send in the keys" is assured.
What a board ....nowhere do i see the word "gold", not even once. The silence is deafening folks.
devalue the currency means debtors win and savers lose. Is there such a thing as savers prison?
devalue the currency means debters win. Savers lose. Is their such a thing as savers prison?
A "savers prison" ? Yes, it's called a passbook savings account. Put all your money into one for a lifetime, and at the end of your sentence you come out with your sphincter looking like the Holland Tunnel.
A "savers prison"? Yes, it's called a passbook savings account. Put all your money into one for your entire lifetime, and at the end of your sentence you come out with your sphincter looking like the Holland Tunnel.
the size of all available gold is dwarfed by the enormity of the debt. Gold's ultimate valeu in the face of all this is a complete crap shoot. The future value of ammo, guns, cigarettes and gasoline are more easily predicted.