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FOMC Announcement: $600 Billion, $75 Billion/Month, $110 Billion Including QE Lite, 35% SOMA Limit Removed, $27.5 Billion Weekly POMO, On Run Rate To Monetize Entire Budget Deficit
For immediate release
Information received since the Federal Open Market Committee met
in September confirms that the pace of recovery in output and employment
continues to be slow. Household spending is increasing gradually, but
remains constrained by high unemployment, modest income growth, lower
housing wealth, and tight credit. Business spending on equipment and
software is rising, though less rapidly than earlier in the year, while
investment in nonresidential structures continues to be weak. Employers
remain reluctant to add to payrolls. Housing starts continue to be
depressed. Longer-term inflation expectations have remained stable, but
measures of underlying inflation have trended lower in recent quarters.
Consistent with its statutory mandate, the Committee seeks to
foster maximum employment and price stability. Currently, the
unemployment rate is elevated, and measures of underlying inflation are
somewhat low, relative to levels that the Committee judges to be
consistent, over the longer run, with its dual mandate. Although the
Committee anticipates a gradual return to higher levels of resource
utilization in a context of price stability, progress toward its
objectives has been disappointingly slow.
To promote a stronger pace of economic recovery and to help
ensure that inflation, over time, is at levels consistent with its
mandate, the Committee decided today to expand its holdings of
securities. The Committee will maintain its existing policy of
reinvesting principal payments from its securities holdings. In
addition, the Committee intends to purchase a further $600 billion of
longer-term Treasury securities by the end of the second quarter of
2011, a pace of about $75 billion per month. The Committee will
regularly review the pace of its securities purchases and the overall
size of the asset-purchase program in light of incoming information and
will adjust the program as needed to best foster maximum employment and
price stability.
The Committee will maintain the target range for the federal
funds rate at 0 to 1/4 percent and continues to anticipate that economic
conditions, including low rates of resource utilization, subdued
inflation trends, and stable inflation expectations, are likely to
warrant exceptionally low levels for the federal funds rate for an
extended period.
The Committee will continue to monitor the economic outlook and
financial developments and will employ its policy tools as necessary to
support the economic recovery and to help ensure that inflation, over
time, is at levels consistent with its mandate.
Voting for the FOMC monetary policy action were: Ben S. Bernanke,
Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A.
Duke; Sandra Pianalto; Sarah Bloom Raskin; Eric S. Rosengren; Daniel K.
Tarullo; Kevin M. Warsh; and Janet L. Yellen.
Voting against the policy was Thomas M. Hoenig. Mr. Hoenig
believed the risks of additional securities purchases outweighed the
benefits. Mr. Hoenig also was concerned that this continued high level
of monetary accommodation increased the risks of future financial
imbalances and, over time, would cause an increase in long-term
inflation expectations that could destabilize the economy.
Statement Regarding Purchases of Treasury Securities
On November 3, 2010, the Federal Open Market Committee (FOMC) decided to expand the Federal Reserve’s holdings of securities in the System Open Market Account (SOMA) to promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate. In particular, the FOMC directed the Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York to purchase an additional $600 billion of longer-term Treasury securities by the end of the second quarter of 2011.
The FOMC also directed the Desk to continue to reinvest principal payments from agency debt and agency mortgage-backed securities into longer-term Treasury securities. Based on current estimates, the Desk expects to reinvest $250 to $300 billion over the same period, though the realized amount of reinvestment will depend on the evolution of actual principal payments.
Taken together, the Desk anticipates conducting $850 to $900 billion of purchases of longer-term Treasury securities through the end of the second quarter. This would result in an average purchase pace of roughly $110 billion per month, representing about $75 billion per month associated with additional purchases and roughly $35 billion per month associated with reinvestment purchases.
The Desk plans to distribute these purchases across the following eight maturity sectors based on the approximate weights below:
Under this distribution, the Desk anticipates that the assets purchased will have an average duration of between 5 and 6 years. The distribution of purchases could change if market conditions warrant, but such changes would be designed to not significantly alter the average duration of the assets purchased.
To provide operational flexibility and to ensure that it is able to purchase the most attractive securities on a relative-value basis, the Desk is temporarily relaxing the 35 percent per-issue limit on SOMA holdings under which it has been operating. However, SOMA holdings of an individual security will be allowed to rise above the 35 percent threshold only in modest increments.
Purchases associated with balance sheet expansion and those associated with principal reinvestments will be consolidated into one set of operations to be announced under the current monthly cycle. On or around the eighth business day of each month, the Desk will publish a tentative schedule of purchase operations expected to take place through the middle of the following month, as well as the anticipated total amount of purchases to be conducted over that period. The schedule will include a list of operation dates, settlement dates, security types to be purchased (nominal coupons or TIPS), the maturity date range of eligible issues, and an expected range for the size of each operation.
The Desk expects to conduct the November 4 and November 8 purchase operations that were announced on October 13, and it plans to publish its first consolidated monthly schedule on November 10 at 2:00 p.m.
Purchases will be conducted with the Federal Reserve’s primary dealers through a series of competitive auctions operated through the Desk’s FedTrade system. Consistent with current practices, the results of each operation will be published on the Federal Reserve Bank of New York’s website shortly after each purchase operation has concluded. In order to ensure the transparency of our purchase operations, the Desk will also begin to publish information on the prices paid in individual operations at the end of each monthly calendar period, coinciding with the release of the next period’s schedule.
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Gold should go up slightly?? Tomorrow?? Gradual climb to $1500?? I dunno...What's that quote...When I finally gave up all hope, I started enjoying life?
"It's only after you've lost everything, that you're free to do anything."
On that meme: "Freedom is just another word for nothing left to lose"
The key to happiness is lowered expectations.
The key to happiness is no expectations.
Does this mean that the POMO days will be continuing and we can still front run the FED?
Look at the long-bond get crushed.
Virgil selling now..sorry ben ol boy. Bonds take a dive. wow.
EOG getting slaughtered. Commodities seem to be split pretty evenly. PM's down about 1% across the board.
QE4EVA
Yes, as our Beloved Mr. Jim Sinclair has stated from day Uno.
"QE to Infinity".
As there is NO WAY the debt can ever be paid back.
Mr and Ms Market don't like QE 'whatever' much judging by it reaction. We will know in the fullness of time....
Sheesh - DXY dropped about 55-bps on the announcement and has retraced almost all the way back up. All in the span of about 5-minutes.
Yeah, I'm sure that's normal.
Folks, you should be here and see this(from the floor), total confusion, guys looking at each other in total disbelief, they don't know which side to take hehehe! Outa here!
thank you for your sound bite.
lol, I can imagine. Quantitative Easing wasn't taught in any public school or university economics course.
slightly up from expected. Market not spooked. Move along, Nothing to see here! Carry on Market.
And the dollar was last seen limping into the woods to die in peace.
The ridiculous move there has just been in the S&P proves to everyone who ignored it that the markets are only driven by the FED policies. ONLY.
And if that's not enough?
Gawd, it's quite a bit disturbing that we have to depend upon the central bank for economic stability and all they produce is.... dollars.
/ES is carving out the trusty "aneurysm" candlestick pattern; expected to drop dead soon.
In short, what was priced in the markets was about $2 Trillion, so stock market drop of about 500-1000 points should ensue, if it doesn't then the scam has only gotten worse
That 2:16 candle on SPX is just hilarious.
picked the wrong day to stop watching gladiator movies
Looks like some of that POMO money went into bandwidth.
Congrats on not crashing!
I just heard Bill Gross state that this was just the second stage of three to propel the rocket (economy) into orbit. I guess QE2 wasn't good enough, already setting the atmosphere for QE3.
he just doesn't want them to do too much at once or he couldn't front run it all
So I wonder, just what is the escape velocity of money required to remove the Earth's economy from the Earth?
And will stage three take us all the way to the sun?
I had a personal 'whisper number' of $750B in mind.
OMG! You are a prescient one, aren't you.
Geo-politics at play here, a typical move not
to be slapped upon by China at the upcoming
G20, another gift to the TBTF's balance sheets:
the best of both worlds....
picked the wrong day to stop sniffing glade air freshner
ZH servers humming along..
We must remember the market was heading into the abyss without QE and was headed well below S&P 800 who knows what they were baking in for the last 2 months but what good does QE do for banks that are insolvent? So they trade and make a few temporary trading dollars but one of the other desks will be on the losing end.
They cannot lend to anyone regardless of low rates since everyone is broke, homes are too much and their credit ruined. Commodities and the Ponzi tech stocks have all been traded to retardation levels on the basis of QE..well now we got it.
Well the Dems have to be holding on to the Bush tax cuts for something good. It's the only card left they have to play really.
Big question: How do they back all that shit out when the time comes?
Anybody thinking about that one?
They will need to develop the world's first 180db back up alarm first...
Look on the bright side.
The US will soon be debt free, cause once the Fed buys it, it's no longer debt.
yup, they can either save some of it to soak liquidity back out of the market if need be, or burn it later since it was really our printing presses they used.
Why is bloomberg reporting 700 - 800+??
I think they are including the reinvestment from maturing MBS.
SOMA update is the real news . . . "yes, we will buy it all if we feel like it. . " now that should by rights negatively affect the USD but of course it will go up on that news.
Looks like I picked the wrong day to stop chasing cars
Markets are going totally PSYCHO!!
Shove this up yer ass
Capitulation. It will only be a matter of weeks now, maybe a month. BOOM.
Doesnt seem like anything is impressed. HUGE sticksave to put stocks slightly green, other things beaing beaten unmercifully. WHO IS THIS GOOD FOR?
Dollar on its death bed. Who will give her a kiss? Gold.
haters :(
Haterz always die!
On a long enough time line....
(you know the rest)
SJ ... Robo, That is good for ten unjunks in my book, on it.
The Coon does have a soft spot for Scarlett. Well, sorta soft...
$900 billion on an annual run rate - just shy of $1 trillion. Then we have to determine if this is less or more than current run rate and how much was built up due to expectations of a higher amount.
The market is Yo-Yo ing back and forth on the news, looks like a tug of war.
GS and their ilk are causing stop losses to pick the longs pockets and then short squeezing to pick the shorts pockets.
Air pockets.
I think the fed is being honest in stating they are going to target PRICES. It means that with derivatives, primary dealers, and other levers they are just going to determine that the market should increase within a range over time and will use excel solver to hit those numbers. How do they make sure all their confetti doesn't go into commodities and emerging markets to benefit the US?
Will the debt ceiling need to be lifted to hit $600B considering our current deficit run rate - will the new congress allow it?
$900 billion on an annual run rate - just shy of $1 trillion.
I believe that's $900 billion on a SEMI-annual run rate - just shy of (an annualized) $2 trillion. In either case, when you sell in May, STAY away.
Reuters - Feb. 1, 2011 -- Analysts are divided about the size of QE3, with some saying that the Federal Reserve could merely continue at its current pace of buying back $75 billion of Treasuries each month, with others saying the expected new program could run as high as $2 trillion.
Analysts at Goldman Sachs & Co. are even more optimistic, suggesting that the Fed will go as high as $4 trillion, or perhaps even $5 trillion.
Speculation has run rampent after Fed Chairman Ben Bernanke acknowledged during a speech in Boca Raton, FL, last week that the $600 billion program launched last November has not provided the hoped-for stimulus "in a meaningful way."
(And on and on it goes...)
LOL That's excellent.
Hold on to your asses kids, 'Copter boy just slammed this bitch into 5th gear!
So far it's a nothing-burger sandwich with extra zero-impact sauce.
The interesting parts of the announcement, I think, will turn out to be the following:
"In addition, the Committee intends to purchase a further $600 billion...."
and
"will adjust as necessary"
Essentially, we will do whatever we feel like doing, no matter WHAT you thought we said.
Well now that the elections are over and people feel energized perhaps now they will begin to say "Hey what gives this guy the right to spend billions of our dollars on worthless paper and debt while Wall Street pays themselves mega salaries as if they are the only ones not in a depression?"
It has been 2 years..there are no jobs. It is over for Ben.
let's hope so!
Fundamentals still the same,consumers have no cash,companies increase profits by firing people and reducing wages,the banks are bankrupt,property is unaffordable,credit scores get poorer,cheap foreign imports like immigrants flood in,fighting a war you can,t win,terrorists born in your own streets ,Globalisation (vast profits for the few,poverty for the masses),etc,etc,etc.Same shit different day.Their days are numbered,whether events get them first or the people,you can,t cheat the hangman forever.If they had any self-respect,integrity or honesty they would resign.
600 billion is almost half the yearly budget for the US. Yet, all of us are non-plussed by the announcement. I would suggest this is a great success for the central bank.
We no longer have a good understanding of value/costs/debasement. The numbers no longer mean anything. It is like living in another universe. I want the real one back...
Well, that the thing, isn't it? It looks as if the Fed will take a reactive approach to monetizing the deficit. If foreign buyers or grandma want to come in and invest in our deficit (with little real yield) then the Fed isn't going to stop them from doing so.
In the likely event that Grandma and China don't play along, the Fed will be able to adjust "as necessary".
The Fed took a ball park average of QE amounts from the PDs to make this as neutral looking event as possible. It worked on the announcement... but people will figure $600 billion on top of QE lite is still not a great thing.
Yeah, Wall Street's gambling habit got a little out of hand. Seems there's not enough money in existence to cover the markers they took out. Which is the bag we're holding. And we now have to deal with numbers that are beyond a normal person's comprehension. It's like contemplating the size of the universe.
If they'd pulled this shit in Vegas 50 years ago, piano wires and shallow graves would have been their reward. Cuz the mob had rules, dammit, the main one, of course, being, 'You fuck with us, yer dead.'
Wall Street, obviously, is not subject to any such rules.
I like your analogy. Wall Street with the help of our government which in theory represents us the taxpayer, and the Fed which represents??? can make more casino chips. With the help of Bernanke and the Congress it reminds me of the old Dorito's chip commercial:
"Eat all you want. We'll make more."
Tough!
Right. People are jumping up and down about the mid-term elections and of course the press is all over it all day and most of the night. Republicans yeahh.... Democrats booohhhh. Change we can believe in blaahhh, blahhh, blaahh, baaaaaa. The sheeple are wading in a pile of bull-shit and they don't even know it.
Ben prints nearly the equivalent of the entire US budget over one year's time and NO ONE (except some blogosphere types and the ruling oligarchy) has an effing clue.
You know what I would find interesting to calculate:
(Total market US stock and bond gains this year) minus (POMO injections, the change in total market commodity price increases, change in total U.S gold reserves price, and world dollar reserve depreciation) YTD. If that's not a ginormously negative number, then just subtract out all the TBTF's unwound derivatives and MBS shortfalls and "off balance sheet" bombs and you will crap your shorts.
If you really want to have colonic nightmare, just throw in the projected fiscal shortfalls for the U.S. goverment for the next 10 years.
BSB printing 600 billion is like dropping a loogie into Lake Erie.
"Stable price and full employement". Yes, maybe if dollar losses 90% its value and we're all willing to work for $1/hour.
TPTB are either crazy ass stupid or insanely evil.
A third, big tail on the DXY, looks like this one could be ready for launch.....
Gold/DXY melt up? What was the advised word? Oh it is on the tip of my tongue...oh, PANIC.
Question: If you were the head of the FED would would you do tomorrow, within a month, and within your first year?
Be specific.
Burn it down on the 5th of November.
Yeah - that would be helpful.
Thanks Ben for the pump so I could dump.
Here we go...
U.S., meet Japan.
WTF???? Rand Paul won in Kentucky. Why hasn't he stopped the Fed yet?
Wow! Another Dollar flash crash!
They expect $100B per month, so we'll just say $75B...even though it'll still be over $100B with QE1. Then, on QE3, we can roll 1+2 and THAT will create jobs.
The US economy is still a giant - this is about the right amount to cover insurance for the foreclosure mess, at this stage. POMO is difficult to foretell, Congress may yet restrict Treasury issuance specifically to cover the monetization.
I don't remember the last time there was this much intraday volume outside of the first and last 10 minutes.
BLUNDERNOMICS as expected.
Homeowners, you screwed.
Bankers, you get a new suit.
Stock brokers, you get shut down for a day and your internal circuity a blow job, er, air pressurized cleaning.
People who eat food? Buy it now while it is cheap.
So the new $64,000 question is what do the BOJ and ECB do tommorow?
The Japanese financial press will threaten to commit suicide if they don't intervene, per usual.
LOL to anyone who followed the PD's advice of front-running the 30 year here.
They thank you for letting them dump those before this trainwreck.
LOL
Monetization, bitchez!!!!!
Is that a violation of the G20 pact not to start [sic] a currency war? Hmmmm
http://www.reuters.com/article/idUSTRE69K0Q720101023
I'm looking at headlines "dollar sinks pushing commodities up" yet somehow GOLD is going down and everytime it tries to go higher it gets smacked down. I smell intervention.
Nurse, is that a major stock index or is it my EKG readout?
Hey goldmiddlefinger...
Why don't you shove this??
You really need to post a link to the source of your images, as they are oddly unique and make one wonder where you find all this good/different stuff!
I for one appreciate the thought that goes into it.
Those over-the-shoulder-boulder-holders look like they're ready to burst.
BTW, isn't she worried she'll wear out her cleavage? :>)
Hah...my only complaint is that his images only show a partial story! You can't post something like that and not cite the source, so that readers can research further if they'd like!
threadbombing
Thanks. With the images, it's the lack of context that makes it oddly fascinating. I mean, is that girl off to do unspeakable things, or just something stupid like threadbombing.
The context is what's missing that makes it oddly captivating...
Trust me, from where I am sitting it's not her cleavage that is any danger of wearing out. My palm on the other hand...(TMI?) http://www.youtube.com/watch?v=jUwd737mioM
Chafe Chafe Chafe Chafe Blister
http://www.thefreedictionary.com/chafe
Good thing those aren't water balloons, or they'd have popped by now.
The images Robot Trader (a complete ass-hole, BTW) is posting are from a site called thread killers or something like that. They're designed as an endless loop to slow down load times. Tyler, please revoke this fucknutz privileges. Fuck you, Robot Trader.
Oh, hadn't looked at them like that, but now that you mention it: Yeah, 'strewth!
How can anyone junk this? Even a blind gay man could appreciate this clip. Please post the unedited version though...
...and thanks in advance.
Junking Robot is gay or something
My right hand has found its way into my pocket with that animation robot. !
Helecopter Ben had his hand in there too.
WTF !
Lost my wood !
Back to watching the manipulation
Anyone that has junked that should be immediately banned.
Food fight.
I've got $200 on Robo simply because he can post pictures. Who wants the other side? :>)
ohh..horrible evil thoughts I have
Now THAT is a double dip!
LOL
Well, I've seen several hundred dips. But maybe I've just been watching it for too long. Sort of like watching a faucet dripping. :>)
Check out $ vs. Yen at 1pm. Someone definitely knew what was coming.
So the Bond mkt sells into Ben's buying and this accomplishes what again?
So the Bond mkt sells into Ben's buying and this accomplishes what again?
Pushes yield-chasers into stocks!
So let's go buy some!
....uh, take a check 'til Friday?
Not what GS was expecting!
A big "F--k you!" from Uncle Ben.
Oh please they are all in on the skim.
Yup, GS and others ramped expectations so that this could look modest.
If they are bald faced and hairy tongued enough to say this, for th eecord...
"
You know they're full of BS.
Of course they will revise. They are testing the metal's complex and it's reaction...
tick.tick.tick..
ORI
http://aadivaahan.wordpress.com
I meant to add say this:
"and measures of underlying inflation are somewhat low"
Hah!
If they are bald faced and hairy tongued enough to say this, for th eecord...
"
You know they're full of BS.
Of course they will revise. They are testing the metal's complex and it's reaction...
tick.tick.tick..
ORI
http://aadivaahan.wordpress.com
it smacked gold down to -$20+ at one point.
Bingo Flat. And oil up by the same percentage.
Which do you think these guys are interested in and which one do they wish to kill?
Still time to exit Au, long Oil and Ag. They would love for Oil to spike, since they even say inflations is below expectation...
He who decides the CPI basket decides everything. It seems.
ORI
http://aadivaahan.wordpress.com
ORI, you probably already know that Nikki Haley won the Governor's race in South Carolina. It was a dirty race, even by our recent standards.
Actually I did not DoChen.
Two Indian origin govs. Wow!
Dirty as in irregular dirty or mud-slinging dirty?
ORI
http://aadivaahan.wordpress.com
Mud-slinging dirty. Two guys claimed that they had slept with her. Grimy.
Yick... But I knwo many 38 year olds who have slept with 2 men...
Hmmmm..... I jest of course. Yick!
Yick... But I know many 38 year olds who have slept with 2 men...
Hmmmm..... I jest of course. Yick!
It looks like they're selling the news...wait a minute, it looks like they're buying the news...hold on, it looks like they're selling the news...no, no, they're buying the news...wait a second, they're selling the news..wait, they're buying the news..selling...buying
selling...buyingsellingbuyingselling
Nothing was said.... "intend/will revise"
+0
LOL
That was great !
In what way will 27 billion a week not be sufficient to ramp this market to the moon. Last best chance to buy PMs is on this dip. Right here. Right now.
Enough for all markets
So we are right were we started. A whole lot of nothing.
Kudos to Tyler for making ZH the first headline on the WWW about this important announcement at 12:17pm.
this is always the first place to be. :)
No kidding, like lightning you see it on ZH before you can even hear the rumblings anywhere else.
Thanks ZH crew.
Tyler posted so quickly I though he had inside info. Maybe a mole in the Fed?
I'm sure there are those who work for the beast that are questioning this insanity along with the rest of us. I would not be surprised in the least if that were the case.
Everyone loves or hates Tyler. There IS no middle ground.
Love
All the fed crooks have to do is say there going to do something, then everyone will front run them and they don't have to do anything.
Lulz...
http://finviz.com/fut_chart.ashx?t=DX&cot=098662&p=m5
Digital dollars, done dirt cheap - And Awaaay We Go... How Sweet It Is!
Continuing QE Lite plus another $600B. They are going to monetize the deficit, basically. Total $900B for the 6 months; that is not so minor.
aaaannndd...
we're right back to the same volumeless trash we were before..
biggest nothingburger in history. 600 billion of nothing.
Weird, this decision just give me the chills - I think of it as the beginning of the end....
Fed computers are engaged. Here comes the surge!!!
Excuse me, but the NY Fed numbers don't add up. If they expect to reinvest up to $300 billion, that is $50 billion per month. How do they get $35 billion per month?
C'mon Charles, the Fed numbers don't have to add up. Ever.
Let's review, I made a slight mistake but they are still wrong! They will buy $900 billion in 8 months, that's $112.5 billion per month. So when counting the $75 billion in new money, that leaves $37.5 per month in refinancing - per their calculations it comes to at most $33.3 B.
Hello, this is the political world, where irrational numbers rule the day. They will calculate weekly numbers one way, monthly another, and yet another way yearly.
You say they don't add up? Well they say this stuff is way more complex than simple calendar math, and only an idiot would try to simplify it all in such a manner. They have to apply adjustments so that it all makes "sense."
In other words, you're wasting your time looking for logic within propaganda.
600 / 8 (Nov 2010 - Jun 2011) = 75?
Higher rates.. the cure for monetary madness?
Yes, sir, but not today.