Fed Monetizes $8.2 Billion In Bonds Due 2018-2020
Another day, another POMO. Today Brian Sack bought up $8.2 billion in various CUSIPs maturing between 2018 and 2020, with the issue accepted the most ($2.3 billion) being 10Y LJ7, issued last September. As all of the recently auctioned off 10 Years are now trading at lower prices than where auctioned, not surprisingly neither the NT3 nor the ND8 had any buyback submissions as PDs would be underwater on the buyback. The total submitted to accepted ratio was 3.7x, lower than median and generally indicative of spare dry powder at the primary dealers. And so the PDs make another few hundred million courtesy of commissions and par-market differentials. Aside from that, nothing else to see. Market focused on closing tick to see if POMO has now become a curse instead of a blessing.