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

Tyler Durden's picture

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

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101 years and counting's picture

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's picture

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

hambone's picture

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


"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's picture

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's picture

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

tmosley's picture

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

NidStyles's picture

Great opportunity to buy the dip.

willien1derland's picture

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

bothsidesnow's picture

Gee maybe this site was right after all


and maybe Hussman was right also.

Free money coming to an end. 

hedgeless_horseman's picture

...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's picture

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

QE to Infinity and Beyond!

ghostfaceinvestah's picture

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's picture

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

Boston's picture

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's picture

Hold it long enough and you are the ultimate sucker.

Boston's picture

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's picture

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

6 String's picture

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's picture

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


equity_momo's picture

Probably below 2 fiddy is my guess ghost.

Hedgetard55's picture

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

silberblick's picture

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


Ray1968's picture

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

Smartie37's picture

POP goes the weasel

falak pema's picture

fuck goes the silver squeezel 

TradingJoe's picture

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

willien1derland's picture

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's picture

No more?  More like less more.

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

willien1derland's picture

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

LRC Fan's picture

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's picture

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's picture

..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's picture

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

Squid Pro Row's picture

Great synopsis, thank you Tyler.

Josh Randall's picture

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

Mountainview's picture

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

gkm's picture

QE two and two-nineths?

Pedro's picture

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's picture

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

TooBearish's picture

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's picture

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

TooBearish's picture

My pleasure - but hardly original

Caviar Emptor's picture

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's picture

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

Problem Is's picture

"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