And...It's Gone: QE2 Ends As Dealers Flip Just Auctioned Off 7 Year Back To Fed After Holding It For Under 22 Hours

Tyler Durden's picture

Goodbye net monetization of US debt. Going forward the Fed will only roll maturing debt, as per QE Lite announced in early August, and due to the fact that it will be roughly one fifth the notional periodic impact of QE2, is not what so many erroneously classify as QE2.5 (a topic beaten to death previously). The biggest question of who will buy bonds now that Primary Dealers will be unable to roll debt to the Fed remains, judging by today's carnage in bonds, completely unanswered. And confirming that PDs always and only cared about flipping the On The Run bond, is the just concluded last POMO, which out of $4.909 billion bonds monetized, saw a vast majority, or $4.405 billion in the form of Cusip QT7: the 7 year just auctioned off yesterday! In other words, Dealers held the On The Run for less than 22 hours before flipping it back to the Fed!!! Well, those days are now over.

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mayhem_korner's picture

Is Brian Sack one of the 428K on this week's initial jobless rolls?

Innocent Bystander's picture

Phew!... the calm before the next storm

whstlblwr's picture

How long calm last? I'm not stock expert. But see forcing 30 biggest banks to raise capital, reserve requirement. Could be coincidence.

mayhem_korner's picture

You seem to be shorting pronouns and conjunctions.  How's that market?

toady's picture

Sounds Eastern European...

Stuck on Zero's picture

Naw.  He's using text disguising software.

alexwest's picture

i wonder what FAT ASSHOLE rosenberg aka roise would say
on that .. he always come up w/ ideas who is going to buy debt


Cognitive Dissonance's picture

Rosie got fat on rabbit stew. Watch your cute little ass or you might be lunch.

BTW it is "Rosie" not "roise".

Bertie Bear's picture

What happened ito bond yields in the UK when QE ended? Sod all. Rosie in right. Pimco is wrong. Go join the masses of traders who did their nuts shorting JGBs in the 1990s. Apparently no-one would buy these because the deficit was so high.

Johnny Lawrence's picture

Exactly.  Look at what bond yields have done in Japan over the last 15-16 years.

Bertie Bear's picture

......AND I bet you wouldn't abuse Abbey Cohen because her size would you. Anyway Rosie isn't that fat at all. Cuddly maybe, but never fat.

hedgeless_horseman's picture

The biggest question of who will buy bonds now that Primary Dealers will be unable to roll debt...

Households (in Reston, Va) will buy until QE3, then they will sell (at a profit).

Fundemental Principles's picture

Certainly not my household - I pay a service to keep the TERMITES out.

Paper eating vermin be damned!

hedgeless_horseman's picture
Security Auction
Date Issue
Date   Offer
  Amt. 13 wk Bill 07/05/11 07/07/11   27B 26 wk Bill 07/05/11 07/07/11   24B


Certainly, $51B in bids have already been lined up before the weekend - we taxpayers pay a premium to keep the VIGILANTES out.

Sovereign paper shorting vermin be damned!

Cdad's picture

And just now on the BlowHorn [CNBC]:

"QE2 didn't do what it was supposed to do... I think we should just declare victory and move on...but in the end, I don't think it succeeded."  David Kelly, JP Morgan


HelluvaEngineer's picture

Worked just fine.  As proof, check out David Kelly's last bonus check.

SMG's picture

QE2 did exactly what it was suppossed to do. Which is what the Federal Reserve's real mandate is, simply to prop up the evil banking system at all costs.   Once you realize that this is true, all these actions make perfect sense, no matter what lies they say.

SMG's picture

My best guess is somehow (maybe war or a financial calamity) they are going to rally the dollar and crash the economy.  The banks and large corporations who are flush with dollars right now, will be able to seize any remaining assets the middle class and poor have left.   Then they destroy the dollar and bring in something like the SDR or Bancor on a global scale.

Bay of Pigs's picture

No, everything is working just fine. Brian OFlanagan just said so on the silver thread.

I'm surprised he's not here setting the record straight for those of you who don't understand how the markets work.

Deepskyy's picture

You just can't make this shit up.  If it wasn't so damn sad, it would be great social commentary.

Do we even care how deep the rabbit hole goes anymore?  Are we just along for the ride?


buzzsaw99's picture

methinks the maggot protesteth too much.

Stuck on Zero's picture

Could you be a bit more succinct?

Cdad's picture

Just now on the BlowHorn [CNBC]:

"When they [equities] get cheap you got to buy ' can almost buy them blind."  Gordon Charlop

Sounds like fabulous advice, straight off the floor of the NYSE.

jtmo3's picture

"Goodbye net monetization of US debt."


Are you freakin dreaming?

SheepDog-One's picture

Its over, theyre done monetizing the debt into ETF's and therefore 401K's, which the Treasury will seize next.

Say goodnite Irene.

jtmo3's picture

You don't really believe that, do you?

LongBalls's picture

If your dumb you will sit back and watch them. If your smart you will take a 50% loan out on your 401K now as insurance. Reinvest it yourself so you don't loose via opportunity cost while you are paying back into your 401K. I just started trading a year ago and blew my John Hancock 401K performance out the window. I am up 32% versus 4.7%. The internal fee's kill a 401K anyhow. 401K's are a scam. They lock down your money so that Wall Street can gain weight. MY BET....they are coming after retirement accounts. Bet your chocolate starfish on it!

White.Star.Line's picture

22 hours might be as long as you would want to hold on before depreciation starts biting your investment.......

mayhem_korner's picture

You know what they say about once you drive a new car off the lot...

augie's picture

Well if it's a GM car, then i believe the saying goes, "you'll be back in 15 min..." 

Caveman93's picture

Step one: Grab Grenade

Step two: Pull pin

Step three: Toss back and forth as quickly as possible

Dr. Engali's picture

Goodbye monetization until the dow drops below 11,000 and the 10 year yields 4%. Then old Benny boy will buy another trillion.

buzzsaw99's picture

naw, boner will balance the budget. lololololol

Problem Is's picture

If Bone-nher was a balanced budget boy...

He would cut back on his 55 gallon drum consumption of Orange-Man-Tan...

SheepDog-One's picture

Thats not the plan. Oh I know thats what they want everyone to BELIEVE the plan is, take a little dive on the equity markets, FED comes running to the rescue...except this time no one shows up to once again bail out bubble equities.

Americans with their normalcy bias coma are the easiest targets for 3rd worlding in history.

Party up this weekend, america, celebrate your 'Independance' (LMAO) in a drunken BBQ fest, as you dont even notice its all done, over.

Deepskyy's picture

Is it bad that I'm actually hoping you are right Sheep?  I'm getting ancy about the SHTF timeline.  Lets get this party started!



bakken's picture

..but it doesn't end with a bang..but with a whimper.

Dr. Richard Head's picture

This 4th of July I, along with 15 volunteers, will be in the local parade with a car decked out with Ron Paul 2012 decorations and will be handing out slim jims promoting his Pres run. Pissing in the wind perhaps, but let it not be said that no one tried.

Fuck the Fed for all it's worth
Every single one on Earth

john39's picture

too late, fed's job is done.  no doubt it will be discarded so some politician can claim that he fixed the problem.  meanwhile all valuable assets in the US will have been gobbled up by international banking interests.  no political fix for this, its way beyond it.

White.Star.Line's picture

You Sir, are awake!

Please proceed to the lifeboats. You now have an assigned seat

baby_BLYTHE's picture

Nice, I just put a Ron Paul 2012 bumper sticker on my car.

Often when I drive down the Eisenhower (290) to work in the city, I spot Homeland Security vehicles 'monitoring' activity on the expressway. My license plate is probably in one of their databases already

The slim jims are a great idea, btw.

Problem Is's picture

You May Be a Domestic Terrorist If:

  1. You have a Ron Paul bumper sticker on your car...
  2. You mention the US constitution...
  3. You engage in domestic food production...
  4. You own a gun...
  5. You mention the Fed...
  6. You own Gold & Silver...
  7. You criticize the Federal Government...
  8. You criticize multi national corporations...
  9. You criticize Wall Street bailouts...
  10. You mention Banksters or the NWO...
  11. You comment on Zero Hedge...