Fed To Monetize Just $93 Billion In Next 30 Days: Lowest Monthly Total In All Of QE2

The fed has just released its new POMO schedule for the period from May 12 to June 9. In essence, every single day between now and Thursday June 9 will see a POMO, except for holidays and June 2. The total amount to be monetized is just $93 billion consisting of $80 billion in Treasurys (no surprise) and just $13 billion in MBS, confirming that as we have expected, the QE Lite component of monetization is coming to a rapid end as few if any prepay their mortgages with the Fed any longer. The MBS component is down from $17 billion as of the last schedule, and from $22 billion two months ago. The total monthly amount of $93 billion is the lowest of any monthly QE2 schedule. And following the end of this schedule, there is just another 20 days before QE2 ends on June 30, meaning from now until the end of the ramp, there is at best about $160 billion in incremental capital courtesy of Brian Sack and Printocchio. Furthermore, as of the end of this POMO schedule, the Fed will have monetized just $711 billion. Throw in another $60 billion total
for the remaining period through June 30, and the Fed will be woefully
short of its upside range of monetizing up to $900 billion in USTs and
Agencies.

Comments

[101 years and c...]

totalling all QE2, it appears the Fed is on target to buy $750 billion in treasuries.  well short of the original target of $900 Billion.  thats a lot of liquidity not coming as was expected in Nov.

[SilverRhino]

How the hell are they doing this when we have a DEBT LIMIT? 

[hambone]

Not so much a limit...more a DEBT SUGGESTION.

PLUS...

"The U.S. will hit its borrowing limit on May 16, according to the Treasury Department, but the government can stave off a potential default until Aug. 2 through special accounting maneuvers."

[Magnix]

I thought they have extended increasing the debt ceiling to Aug 2 and that gives them more time to borrow more money per WSJ. (???)

[NidStyles]

They aren't buying the T-Bill's from the Treasury, they are buying them from the Banks.

[tmosley]

Yes, slow down QE2 so the economy collapses, then they will be clear to do QE3.

[NidStyles]

Great opportunity to buy the dip.

[equity_momo]

After you.

[willien1derland]

Spot on tmosley - 2012 is a U.S. Presidential election year - Vote Early & Often...not to mention POMO profits in every Primary Dealers Pot... 

[e_goldstein]

Yep. Exactly.

[bothsidesnow]

Gee maybe this site was right after all

http://thesheepletimes.com/2011/04/30/bernanke-sends-signal-to-carry-trade-speculators/

and maybe Hussman was right also.

Free money coming to an end. 

[hedgeless_horseman]

...until the end of the [CURRENT] ramp, there is at best abour $160 billion in incremental capital courtesy of Brian Sack and Printocchio.

The Show Must Go On.

[traderjoe]

But, but ... Who will buy all those Treasuries to be issued?

QE to Infinity and Beyond!

[ghostfaceinvestah]

Surprise, surprise, stocks sell off, USTs rally.

So much for the UST shorts.  Wait until QE2 ends and the stock market crashes.  We should see the 10 year below 3% in a flash.

[6 String]

....And, if so, it will only mark the optimum point to short treasuries. Because re-inflate is the only choice.

[Boston]

I re-entered my most--but not all--of my Treasury longs this am (on the pullback), but not everything I sold on Monday.  

Boy, am I kicking myself.

[6 String]

Hold it long enough and you are the ultimate sucker.

[Boston]

Um no.  I went long when the 10 year was around 3.6%-3.7%.  The only suckers over these last two months have been the shorts.  Sounds like you.

And I plan on shorting AGAIN (as I did in the fall of 2010) when the stars line up.....technically and fundamentally.  But that's not now.

It's a trade, sonny.  Pay attention.

[traderjoe]

I don't think there are many traders here anymore. Certainly a lot less. Why trade against a rigged market? But, good luck (seriously).

[Boston]

Thanks.

[6 String]

Um, yes, Mr. Defensive. I got it. You re-entered. Bravo. And, um, yes again...hold it long enough and you are the ultimate sucker. I hope you know when the clock strikes midnight in the clockless room.

[Boston]

While I have an idea of when the clock strikes midnight, I don't know for sure.  That's what stops are for.

[6 String]

Okay, good luck.

[equity_momo]

Probably below 2 fiddy is my guess ghost.

[Hedgetard55]

Market will force Bernanke's hand on QE3 by end of May by taking it down 10-15%.

[silberblick]

If you haven't seen it yet, here's a hilarious animation about Americans and how they are being hosed by their government:

http://thesilvergoldhedge.blogspot.com/2011/05/join-sla-to-get-even-and-...

[Ray1968]

Bravo hit job on silver again.... assholes. May your nads burn.

[Smartie37]

POP goes the weasel

[falak pema]

fuck goes the silver squeezel 

[TradingJoe]

There will be a "bounce" as usual! No sweat! :)))

[willien1derland]

Everyone must be trading because I have yet to see the cleverly (obligatory) BITCHEZ comment - I will try one though I am certain there will be more clever ones - NO MORE FREE MONEY (FOR NOW) BITCHEZ...

[tmosley]

No more?  More like less more.

The crash that ensues will force Congress to allow QE3, because the Republicans are cowards.

[willien1derland]

Well said Sir...Suitable for framing or inside a Hallmark card!

[LRC Fan]

OT-LOL at CNBC just a min ago.  They showed a reporter catching up with a Raj lawyer, and the reporter asked him how he felt about the verdict.  The guy said "GET THE FUCK OUTTA HERE!!!!!!!!" and then gave a middle finger and said "That's what I got for CNBC!"  Caruso Cabrera was like ummmm okaaay?!?  Hahaha so classic

[willien1derland]

I wished I could have seen that - Thank you for the post! - That is classic! Although I would wish it would have been Liesman or Pisani would have had to react -

[Tic tock]

..the US is a running joke...

find 'one' government who wants to be called their 'friend and ally'

we don't even look at US companies when it comes to contracts, a millstone around the neck

What is going to happen the American people?

[kito]

so what you are saying is that as a pm holder, im f*cked? 

[Squid Pro Row]

Great synopsis, thank you Tyler.

[Josh Randall]

Wait a second, the Fed doesn't monetize the US Debt...I reject the premise of your article sir

[Mountainview]

Expect the FED to change the dealine to end of September !!!

[gkm]

QE two and two-nineths?

[Pedro]

I am not sure who coined the term "Weimar Rally" in Tyler's post the other day, but, it was genius and all too fitting.

[Mountainview]

Weimar rally is fine... with the difference the old Deutschmark never pretended to be the world reserve currency!!!

[TooBearish]

Tyler- use your BBG to see how much coupon interest and maturities there are in USD debt this month and next and KNOW that rates are going lower in the next month casue banks and insurer portfolios are losing assets that aren't getting replaced, hammering NIMs.  BTFD in bonds bitchez

[willien1derland]

Thank you for clever 'BITCHEZ' comment! Every TD post needs one!

[TooBearish]

My pleasure - but hardly original

[Caviar Emptor]

Bad timing to be letting up on the QE gas pedal this month: Around the globe PMIs are weakening, inventories are rising and demand for basic materials is already rolling over. To date, Q1 earnings have had a significantly lower beat rate. New jobless claims have jumped. THe housing double dip is in full swing. Money juices in the general economy are drying up. Without more stimulus it's going to be hard to avoid the next leg down. 

[f16hoser]

Is this called: "weening Off" the POMO TEET?

[Problem Is]

"monetizing up to $900 billion..."

The Fed Can Explain That:

"$900 Billion at the end of QE2 is the equivalent of $600 Billion in "pre" QE2 dollars. Same as we announced at the beginning of QE2..."

"No, that does not mean the Fed was printing dollars..."

"No, that does not mean the Fed was devaluing the dollar..."

Bennie "Quickprint" Bernank