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Fed Withdraws $1.8 Billion In Liquidity Via 3 Day Reverse Repo
Considering there was no POMO today, the fact that the Fed just pulled out $1.75 billion from the market via a 3 Day reverse repo (TOMO) may raise some eyebrows. This is probably the first day in many years in which there was a net outflow of liquidity from the market without a corresponding inflow from POMO. That the total amount submitted into the Reverse Repo was $3.09 billion probably indicates just how overliquified the market is, if PDs are willing to accept a modest 0.09% weighted rate of return on a 3 Day repo operation. Also, notable is that the lower bound in the submission rate was a laughable 0.04% on Treasury holdings. Either way, PDs are sans $1.8 billion and nary a hiccup in stocks, while bond yields are back at day's lows. And Dudley hopes the naive public will believe that it is not excess liquidity chasing commodities to all time highs...
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Set up a nasty equities crash and let everyone BEG for QE3.
How Machiavellian.
it's quite predicatable that it will indeed happen.
Rule nr.1 in corporate law: Make yourself needed.
They need some spending loot to get get thru the weekend.
Come on Tyler, are you ever goona give the Bernake a break?
They need some spending loot to get get thru the weekend.
Come on Tyler, are you ever goona give the Bernake a break?
Covert operations aint fuckin cheap.
Didn't you hear? The President sent in the CIA to Liyba to see who the rebels really are!
Way to go Obama! Why they just didn't check Facebook, I dunno .
If they could just locate the 1.2 trilion that Rumsfield said the Pentagon misplaced back in 2001.
That amount would buy us a couple years at least!
If they could just locate the 1.2 trilion that Rumsfield said the Pentagon misplaced back in 2001.
That amount would buy us a couple years at least!
April 27th, the Benake will address the nation.
"My fellow Americans, we where forced to rasie the interest rate 1% , because our progroms where working to well.
The stock market is soaring, people are going back to work, people are being freed in the midlle east, allowing them to join the workforce. It appears our program has been to successful as it appears we can see inflation stirring around the corner,
So in order to be in line with our mandate, we have decided to raise the federal funds rate 1%. We apologize if that happens to reset your mortgage payment and cause future stress to you and your family. This is all about following the mandate, and not taking your home.
Facebook was made for the US rebels.
2.4... trillion to go!
At that rate it will only take 11 years...
Here's a brainteaser: DEFICIT 1.5 TRILLION A YEAR!
What's the downpayment plan now?
I need the UST yield curve as a clue
Sorry, you're out of jokers. I NEED A ANSWER NOW MR. INCONVENIENT!
Classic Pump and Dump. I assume the accountancy department at the federal reserve is led by chimps flinging crap at each other.
Everyone out of the pool!!!
Prove to me that $1.8b was withdrawn. No entity is using honest accounting, and players like the FED are unauditable (well done there for doing nothing Ron/Rand Paul).
It all means NOTHING.
USD/XAU action this morning. Chagrin this afternoon.
I call BS as well!
They did! But, they put $1.8b back in also.
It's all so unfortunate.
I see and hear nothing. Nice try.
April Fools??
Bah! Beat me to it! (By a mile too)
here it comes...shades of July '08
the day after Walmart says inflation is ramping? hmmmm
__ + 7 = 23? see how well you guys have come to know my math abilities, thanks for small favors
The Bernanke Captcha:
_ + 2 = 5
Lemme guess, it accepts any number except 3.
Close, it accepts any number *less* than 3.
duplicate.
-((4i)^2)
Extra large dose of hopium given out to the plebs via jobs numbers. When they're pulling 5+bil/day without bullshit spewing, then it will mean something. Until then, QE500.
These overliquified PDs can play games with equities into 2015 at least.
I pulled luiquidity out once. Too late. His name is Matt.
Should have had one of those "no penalty for early withdrawl" accounts.
I pulled liquidity out once. Too late. His name is Matt.
Giving new meaning to TIPS.
Since when did this site go physics? Come on snowball! I have deep respect for you!
FEd balance sheet (BS) for wk of 3-31
Asset side grew by $21 bn due to QE treasury paper purchases (net of MBS rollover).
Plus the FED paid off final installment of $20 bn on the SFP loan from the Treasury) and covered $12 bn of Treasury checks for govt. operations.
Net, the FED had to come up with $52 bn for these things, which they did by typing $47 bn in reserves, raising $4 bn in cash in the reverse repos and $1.4 bn in currency printing.
So, the 'draining' via rev/repo was way more than offset by typed reserves (roughly 10-1), which the Banks can utilize via the Fed Funds market/securities lending/repo'ing to support stock/commodity speculation.
Game still on for another week.
thanks dave. "...covered $12 bn of Treasury checks for govt. operations." i wondered how they were gonna get around the debt ceiling! overdraft protection!!! we could call this "stealth QE."
i'm assuming you know what you're talking about, simply b/c i already figured these asswipes would have to try something.
what has risen to the top of slewie's data-shake, today, is the corn futurez: up over 6% to $7.36/bu.
after seeing a coupla 5% upticks already this week, i am somewhat surprised given the mix of todays +/- food comm's. out of 14 edible ag. comm's, 8 are in the red.
recently, tyler got us thinkin 'bout the high fertilizer reqirements of corn and the probability of farmers planting soybeans, instead.
well, if da boys want corn, this is exactly how to get it planted, it would seem to moi.
data comes straight from the FED's balance sheet.
during a five week period in Feb/March, the FED covered over $100 bn in Treasury checks (plus paying off $100bn in SFP and another $100 bn in QE purchases by typing up bank reserves (which grew during that period from 1.08 Trillion to 1.38 trillion).
So covering treasury spending via typing is not chump change.
I seriously think the sole purpose of these repos is to appease ZH and its readers.
More like it is to appease the talking heads who can now go on and on about the recovery forcing the Fed to tighten. After all, it's just a 3 day reverse repo.
In other words, it's just as effective a solution as that concrete pumper spraying water on the spent fuel pool at Reactor #4 to refill it, only to have it evaporate as steam upon impact.
These are actions that only benefit the TEPCOs & Kudlows of the world. Talking points, mere talking points.
Market to finish day in the RED....short AAPL..take that HAMY!!!!
File under "admission of guilt".
http://finance.yahoo.com/news/Dow-reaches-2011-high-after-apf-653435655....
the comments are precious
Hey Dexter. When you loose the kernels of korn (sp) in your pallete. Get a freaking life!
Damn, now I'm back to trying to understand Reverse Repos.
If the fed takes some "liquidity" out for three days and then reverses the transaction, how is that really draining excess liquidity from the market? The liquidity is still headed back to the banks.
Is the idea that the Fed does enough of these things on a revolving basis, that there will always be some chunk of liquidity that is tied up? When it goes back to Bank A, the Fed has done another Repo and tied up some different liquidity from Bank B?
Which shell is the pea under?
hi, snoball! i had exactly the same thought while reading the piece!
The chrome plated zirconium one.
If the discount rate is sitting at the 0.05% level, then its for certain that swaps and repos with negative interest rates aught to be coming into vogue. Another thing to watch for is the collapse in face value of gold leasing mechanisms while the lease rate rises, but actually very firm gold spot prices.
For now the dollar decline is also signalling that money market rates are at very best marginal.
tough crowd. 1.8 is pulled back and nobody can acknowledge that it may be the beginning of something more significant???
I agree with you.
In a "notional market" you simply assert additional notions and gauge the response of the algos. Meanwhile, the core drivers are unchanged.
The "something more significant" will come in the form of progressively assertive and threatening notions. Looks like they've officially kicked off some kind of exploratory testing.
It's going to take a major change in the other three branches of government to change anything.
I can acknowledge that it might be the start of something significant.
It MIGHT be a conscious signal warning the market to get ready for real and serious liquidity withdrawal.
or it MIGHT be FED testing the water to see if there are takers (at least overnite or short term) for some of the assets (toxic or otherwise) on the FED BS. ("Can't we get rid of this junk, if only for a few days?).
or it MIGHT be just some window dressing so the FED can say to Congress and any true hawks on the FED 'hey, we withdrew liquidity which proves we're dealing w price inflation.'
It's even possible that banks/hedge funds want/need some of those transferred asset to engage in complex, but presumably profitable (for them) financing for speculation. The banks that receive the assets could simply repo them back out to a hedge fund who might be engaged, for example, in shorting same.
All possible, none knowable at this stage IMO.
The safer bet, again IMO, is that whatever they're up to it won't and is not intended to benefit the Common Joe Schmoe.
I had felt a disturbance in The Force.
We're going into a Depression, damn it!
We are going into a rebuilding phase. BITCH.
Selloff that commenced at 14:40 would seem to indicate little readiness.
There was a 50% drop in SPX volume about 15 minutes ago and with no headlines since the NFP print this am equities look like they are cooling off.
Quit playing around with your precious liquidity toolkit, Ben! I margined the tripple levered super bull SPX ETF this morning, for fucks sake!!
/ZB
The Long Bond catches a bid.
http://www.zerohedge.com/forum/99er-charts-0
The plunge in volume is continuing. We are going to have a fucking negative close on the back of this strong payroll number. That's both freightening and awesome. The fed drains a little liquidity and the market collapses. There really is no one left in this game.
Perhaps you could pull your head out and do a deeper analysis of why that payroll number was "strong".
Those birth/death numbers look promising. Lets enlist some of the all knowing idiot lawyers under 30 years of age.
Or it's just a Friday and fewer want to be long over the weekend in this 'ok, what the heck is going to happen next' environment.
Bernank is just using more toxic paper as collateral.
Please explain what "excess liquidity" is. There are the same amount of assets in the system as before. The makeup of the assets are just different, but the number of assets is the same. Banks can't do anything they could not do before. In fact you could say there is less liquidity due to the loss of an interest bearing asset to less earning reserves.
1.8 Billion is nothing when the daily POMO injections are 7 or 8 Billion. This is yet another Test, to see how people or Markets react when they connect this with the past few weeks of FED Chiefs Jawboning the public about "NO QE3" and "Inflation is our Fault" B.S.
They are gearing up for something Large, And trying to Nudge things in this direction before they Begin!
yeah, strange bond action and stock action, really not sure what is going on.