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$8.2 Billion POMO Closes: Most Monetized Issue Is 7 Year Bond Auctioned Off Last Week

Tyler Durden's picture




 

The Fed-Primary Dealer scam continues in plain view. After today's $8.2 billion POMO closed at a 3.7x Submitted to Accepted ratio (below median ratio - surge in stocks right on schedule), a quick look at the most monetized POMOs confirms that the near-immediate monetization of just auctioned off bonds continues. To wit: as can be seen on the table below, the highlighted CUSIP most monetized is PK0 (as we speculated earlier) to the tune of $1.4 billion or 17.3% of the entire operation. This is the 7 Year bond auctioned off on November 24. That's one week ago. And the market continues to pretend that the Fed does not buy bonds at auction. Why should it: the Fed continues to hand out billions to Primary Dealers courtesy of their transitory intermediation via the bid/ask spread and price-notional differences. Pathetic.

 

 

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Wed, 12/01/2010 - 12:41 | 768137 vote_libertaria...
vote_libertarian_party's picture

Bond vigilantes...dudes...you are WAYYYYYYY behind schedule.

Wed, 12/01/2010 - 12:55 | 768153 Shameful
Shameful's picture

Behind? They are ducking for cover! Why short into the maw of the Fed? Remember if the Fed wanted to they could make the 30 year yield at 1%. Sure might be raging hyper inflation but since they print the money they can dictate interest rates if they so choose.

The real vigilante presence would be going into hard assets and dropping Fun Bux.

Wed, 12/01/2010 - 16:14 | 768202 plocequ1
plocequ1's picture

Bond vigilantes my ass. Not even Charles Bronson or Tony Soprano can stop the Fed. They do what they want.

 

 

Wed, 12/01/2010 - 13:27 | 768439 Turd Ferguson
Turd Ferguson's picture

And Gov Yellen had the audacity to mutter this earlier:

12-01 09:12: Fed's Yellen says long term securities buys "actually quite similar" to the Fed's traditional monetary policy approach

Right.....the Fed's been monetizing one-week old debt for years now, even decades.

Such unbelievable liars these fuckers are!!


Wed, 12/01/2010 - 12:41 | 768141 tmosley
tmosley's picture

The pertinent question, as this has in a sense become old news (for ZHer's): How long until we are called on it, and how?

Wed, 12/01/2010 - 12:43 | 768147 redpill
redpill's picture

This is just fucking stupid.

Wed, 12/01/2010 - 12:56 | 768218 SheepDog-One
SheepDog-One's picture

Yep, and suspension of disbelief continues to rule the world.

Wed, 12/01/2010 - 12:43 | 768148 erik
erik's picture

Ok, here's my question.  If it is $7B today, and the treasuries purchased were mostly auctioned last week, how much are the banks really making?  They make the price difference from last week to this week.  That's not a lot of money is it?

Now if they're buying treasuries that have been sitting on primary dealer balance sheets for a long time, then there could be some bigger money freed up.

Isn't today's case more monetization of debt than freeing up money for primary dealers to juice assets?

 

Wed, 12/01/2010 - 12:56 | 768224 SheepDog-One
SheepDog-One's picture

Couple million bucks....hey to some people thats a bit of money!

Wed, 12/01/2010 - 13:24 | 768416 erik
erik's picture

A couple million is not enough to juice commodities and stocks like we have seen.  I really want input on this.  The end game is literally monetization once the primary dealers are out of any treasuries on their balance sheet.

At that point, we are simply funding the government, and it requires the government spending that money to keep things afloat.  I know the end game is bad, but where does it end?

Wed, 12/01/2010 - 12:47 | 768173 RobotTrader
RobotTrader's picture

Hard to believe with 17% unemployment, the biggest housing crash in history, people are still buying lawnmowers.

One lesson I learned is to never count out the U.S. consumer.

Wed, 12/01/2010 - 13:03 | 768205 h0twire
h0twire's picture

Consumers?....or Fannie and Freddie and the banks trying to take care of all the shadow inventory.

Wed, 12/01/2010 - 12:55 | 768216 MarketTruth
MarketTruth's picture

That's Toro, they also make snow throwers (some of the best imho too). Have you seen the recent effects of global cooling?

Wed, 12/01/2010 - 12:57 | 768229 Joe Davola
Joe Davola's picture

A lot of people remember last February in the east and see snowblowers out front of Lowe's/Home Depot.

Wed, 12/01/2010 - 13:03 | 768271 Robslob
Robslob's picture

Robo...I admit I was one of those people.

 

Bought a lawnmower at the expense of letting my "lawn guy" go...

Wed, 12/01/2010 - 12:47 | 768174 erik
erik's picture

At some point, primary dealers will only have freshly purchased treasuries to sell to the Fed, which would mean the entirety of the QE operation will be monetizing freshly issued debt, right?

Wed, 12/01/2010 - 17:39 | 769747 youngandhealthy
youngandhealthy's picture

Yes Erik....no just thinly disguised.

POMO role in other asset prices move doesn't matter that much now.

Wed, 12/01/2010 - 17:39 | 769749 youngandhealthy
youngandhealthy's picture

Yes Erik....now just thinly disguised.

POMO role in other asset prices move doesn't matter that much now.

Wed, 12/01/2010 - 12:49 | 768183 Arthor Bearing
Arthor Bearing's picture

WHERE IS MY GODDAMNED PITCHFORK?

Wed, 12/01/2010 - 12:54 | 768210 SheepDog-One
SheepDog-One's picture

Monetize the US people into total slavery! And theyre oblivious! If it were a plot line to a movie or book, no one would believe it.

Wed, 12/01/2010 - 12:56 | 768225 Cdad
Cdad's picture

POMO money now obviously flowing into Europe, as the Euro just rose 1 cent against the dollar in six minutes.

It just keeps getting more and more perverted as we go.

Wed, 12/01/2010 - 12:58 | 768244 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

And turned into precios metal?  Nice breakout moving now.  Surprised they couldn't dump Platinum today, wonder why.....

Wed, 12/01/2010 - 13:14 | 768355 Al Huxley
Al Huxley's picture

Ben should have cut a better deal with the PDs before QE2 kicked off, something along the lines of 'now remember fellas, I'm giving you this money to buy tech, retail and financials, not gold and silver ok?  I'm trusting you with this now, so don't screw me over, ok?'

Looks like he missed covering that one.

Wed, 12/01/2010 - 12:57 | 768235 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

The day was still young when Brian Sack returned to his personal office, where he was about to have his personal masseuse rub it out for him.  He remembered Blackhawk Ben liked him to call after the POMO was done after he had poured himself some whiskey to sip.  He took off his shoes and kicked his feet onto his desk.

"Hey Blackhawk."

"Hey Sackman."  Ben's voice sounded scratchy and hoarse.  "Good....ahem...Good thing gold is down.  How did you do it?"  Blackhawk Ben looked sheepishly at himself in the mirror.  He has jealous that the Sackman was stealing his thunder.  Ben had been relegated to working at the Fed laundry mat of late with unemployed "normal people", as Ben called them. 

"We have begun leasing gold from Knox to the PDs in exchange for toll house cookies."  "Yum!"  Sackman took a bite of one.  "They're delicious.  I will have Erin send you over a box."  He looked up and winked at Erin, who was back from her stunt at cnbc.  She began to rub his shoulders but he pointed lower down his body.

From behind Ben someone yelled, "Ben get your ass down here, we have to do the whites!"  "Coming.  Well I have to go Sackman.  Good work today.  Thank you Ben."  "All hail the POMO."  "All hail the POMO." Answered Sackman before he hung up his phone.  He stretched his arms behind his head and thought to himself that he wanted another cookie.  "You know why they call me Sackman Erin?"  "No, why?"  But she knew.  People call him Sackman because he has a huge Sack.

Wed, 12/01/2010 - 12:58 | 768239 TWORIVER
TWORIVER's picture

NFLX 204.7 making negative pattern on 30 min, watch yday low of 195.55 for reversal day.

Wed, 12/01/2010 - 13:00 | 768245 Internet Tough Guy
Internet Tough Guy's picture

Still in the prediction business after your terrible gold calls?

For your sake hope you are paper trading.

 

Wed, 12/01/2010 - 13:01 | 768255 TWORIVER
TWORIVER's picture

Terrible? Gold has moved up maybe 2% and is still forming a POTENTIAL top below 1400. Above there and it is likely to 1500. Below 1340 and its likely to go to 1200. You guys are so emotional.

Wed, 12/01/2010 - 13:05 | 768289 Internet Tough Guy
Internet Tough Guy's picture

Not emotional and not making incorrect price guesses here.

Wed, 12/01/2010 - 13:10 | 768321 TWORIVER
TWORIVER's picture

Time will tell, thats for sure.

Wed, 12/01/2010 - 13:08 | 768312 Al Huxley
Al Huxley's picture

Black Friday to reward the unwashed masses, POMO to reward the elites.  Everybody's happy.

Wed, 12/01/2010 - 13:53 | 768583 99er
99er's picture

SPX

Great effort, Ben. Now let's see what you've been hiding....

http://99ercharts.blogspot.com/2010/12/spx_01.html

http://www.zerohedge.com/forum/99er-charts

Wed, 12/01/2010 - 15:06 | 768990 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

The market is quite the mess.

Wed, 12/01/2010 - 13:58 | 768630 crzyhun
crzyhun's picture

Interesting that not much is being made of the 10y @ virtually 3%. Cannot be good news to the Bean and his other farts. QE2 was not supposed to go this way....

Wed, 12/01/2010 - 14:57 | 768940 Traianus Augustus
Traianus Augustus's picture

I haven't seen a POMO schedule lately, does anyone know if every day is now POMO day?  Of course I mean an announced POMO day, not the behind the scenes backdoor POMO that the fed is so good at.

Wed, 12/01/2010 - 17:46 | 769777 thepigman
thepigman's picture

Bubbles Ben and Brian Sack have

yet again lost complete control of

the long end of the Treasury curve. Incompetency

at its best.

Thu, 12/02/2010 - 02:09 | 771063 EZYJET PILOT
EZYJET PILOT's picture

Can somebody put the article in to plain English for me? I take it that the banks purchased treasuries at auction on the 24th of Nov and now the Fed has purchased them at a sizeable profit for the banks, is this correct?

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