Frontrunning Today's POMO

Tyler Durden's picture

Today, is the first of three last POMOs to be conducted before the November 3 D-Day, on which we will learn how many tens of billions more will be added to the daily POMO monetization. As announced previously, Brian Sach will buy back bonds maturing 2/15/2021 – 8/15/2040, of which many that likely were auctioned off as recently as a week or so ago (we will compare the 2040 Cusips with those from the 10/14 30 Year auction to see just how prompt the Fed is at remonetizing immediately auctioned off bonds once the permitted issues are announced). In the meantime, here is the list of most probably monetization candidates.

  • T 8.125 08/15/2021
  • T 4.5 08/15/2039
  • T 4.375 11/15/2039
  • T 4.25 05/15/2039
  • T 4.625 02/15/2040

As usual, buy these asap, use a few million turns of leverage, and sell back to the Fed boys in under 3 hours.

Below is the relative cheapness of the bonds, together with information of how much is available to the Fed under the 35% SOMA limit, and also how much the Fed has purchased of any given issue in previous 2009 and 2010 POMOs.

Has the Fed once again telegraphed its intentions to the entire world? Is it now nothing but a mockery for the world's frontrunning Primary Dealers and PIMCO? Tune in just after 11am Eastern and find out.

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99er's picture


But some investors have begun worrying that the market consensus for a big burst of QE may be overdone. This has been backed up by comments from some Fed officials.

Kansas City Fed President Thomas Hoenig called more asset buys by the central bank a "very dangerous gamble." New York Fed President William Dudley said the U.S. economic context would determine whether an incremental or big bang approach to asset purchases was better.

unwashedmass's picture


yeah, some of these idiots are having second thoughts.....could they be seeing the death of their multi-billion dollar gravy train up ahead if they do?

Rand Paul is a total kook .... except...he's one more voice in Congress screaming get rid of the Fed. .... for that alone....for that alone....

HelluvaEngineer's picture

Why exactly is he a "kook"?  Not that I know too much about him, but that's a meaningless word.

tmosley's picture

It's a word that allows you to write people off without further examination.

Like "nigger" used to be.

unum mountaineer's picture

yeah, some of these idiots are having second thoughts.....could they be seeing the death of their multi-billion dollar gravy train up ahead if they do?

alternatives? you mean run an operation on the up and up? pppffftt

dehdhed's picture

fed using doublespeak ... probably coming in a bigger way than previously imagined

unum mountaineer's picture

the ol' goobelygook..its just not for pretending to be a gentle old man...ever watch family guy? wanna piece of candy? It's right in my pocket...hmmm..

dehdhed's picture

i tried to find a link or youtube video but couldn't.   a few weeks ago, in a bloomberg interview, i heard a fed governor say they absolutely don't want deflation and added that they don't even want disinflation.  my interpretation was wow!, they absolutly want inflation and they don't even want the rate of inflation to slow down.

i think that was the moment of truth, and all this other stuff is fluff


Mongo's picture

I like the title "Cheapness vs. sector".



plocequ1's picture

I feel like im in an OTB. Ill take 200 on Amazon in the 4th, 3 to 1

unum mountaineer's picture

perfect analogy..all the horse steroids and stable side shenanigans..sadly OTB is doomed too..


I remember, not too long ago if a horse broke its leg or had an unfortunate accident, never to race making was an option..but usually one would put the thing out of its misery..shotgun style, have glue or meat for some other apt remedy for this "market"..

RobotTrader's picture

There's no POMO today.

Gold and Euro getting slammed pretty hard.

Some big names like CMI down big pre-market.

Looks like we might have topped out today, who knows?

Saxxon's picture

Who knows.  I took advantage of that pop in gold to offload my remaining DGP.  I'm flat and happy and taking a break for a hotdog and a beer.  Save my seat for the main event - which I have a feeling may get sold.

Zeilschip's picture

POMO still mentioned on their website.. but price action would suggest otherwise I agree. Maybe it's the Euro Sovs (Greece) again?

-1Delta's picture

Could be right. Using hourly charts, dont see how the dollar doesnt break to the north, and thus, the risk trade could be over.

We have priced in all that can come in QE, and front running (at least now after retail even knows), is probably a good way to get caught.


Gold, stocks, bonds doesnt matter... if the dollar bounces (or mainly EUR and AUD) they all fall

dehdhed's picture

my guess is the algos have to first test the flash crash in the dollar last friday evening

IrrationalMan's picture

if the banks think that the market is going down instead of up on a POMO day, what do you think they will throw all of their loose money at?  Proping up the stocks or shorting them. 

Call me an optimist

Tyler Durden's picture

There is a POMO, but as we noted last week when we noted that Goldman is pitching it to clients as a buying event, it is no longer effective.

HelluvaEngineer's picture

Euro getting whacked, which explains everything else

-1Delta's picture

yup thats all you need to know in this game

Kina's picture

JPM doesn't look that attracitive wearing silver naked shorts. Longs are much more attractive, and legal.

tmosley's picture

POMO, cowbell, whatever.  All I know is we need more of it.

working class dog's picture

Banks are crying poverty? worse decade to come in 10 years, sounds like Japan to me.  Also the austrian economics approach to austerity in England, they will lay off 500,000 govt workers who in turn will do what? Go on welfare.

Than they say they will raise interest rates. This will last for about a minute, than they will devalue the pound and hence the horse race to the bottom continues. USD I would expect will rise on the GDP report out of England today if the Pound drops than shouldn't the USD rise. Also I had mentioned the perfect head and shoulders pattern on the DX usd daily chart. If this pattern continues on a retrace, the USD will rise to about 80.10 or so than take a big dump if the head and shoulders pattern continues.

Free_french's picture

I haven't seen any information in ZH about this matter


On Saturday, Sweden's financial watchdog announced it had revoked HQ Bank AB's licence because it had breached Swedish legislation and demonstrated serious deficiencies in its trading operations. The Swedish Financial Supervisory Authority said that the bank “has grossly breached the most central provisions of Swedish legislation” and that “HQ Bank has overvalued its trading portfolio for a long time”.

Swedish investment bank Carnegie Friday said it will buy competitor HQ Bank for 268 million kronor ($37 million). Carnegie spokesman Andreas Koch told AP the investigation would not affect its agreement to buy HQ, which will make Carnegie the Nordic region's leading independent investment bank.


Even if it is a tiny bank... Some countries have some balls...

Hope to see this style news in the US...


the not so mighty maximiza's picture

The Sweds can go Viking and cut off all heads, the US are a bunch of pansies.


primefool's picture

Sinmce Bennie is so proud that he can " create dollars at no cost , and in any quantity" - someone should parade a few kids in front of him - kids that will die for the lack of a few thousands of dollars for some medical procedure. Wanna pay for that? "At no Cost" after all? Huh?
No no no - there has to be a large segment of the population that is perpetually short of Dollars - preferably on the verge of death for lack of Dollars - thats what gives the funny grren pieces of paper any meaning.

snowball777's picture

Dedicated to Timmay, Bennie and the InkJets...

Silverhog's picture

Small rally in the dollar today shows you even the most terminally ill person can have a good day now and then.

Fearless Rick's picture

Just noting that yesterday's close was a pretty serious sell-off and that the high for the day on the Dow was 10:00 am. All trading after that was churning, until the last half hour, which was outright selling.

Whether it was machine-based or not, that kind of pattern (early high, late sell-off) is normally a strong sell sign. We'll see if the traders were paying attention. with the Dow down over 60 points just minutes in, I'd say they were.

POMO or no POMO, this market has all the characteristics of a severe bear event. JMO

bullwhip29's picture

Not to worry, COH going parabolic this morning. The consumer is not dead...yet. So what if people aren't paying their mortgages, feeding their kids and taking care of other trivial matters like that. As long as I can get my hands on another overpriced handbag or the latest iThingy, it's all good.


mjbommar's picture

In case anyone else got sick of the NYFRB historical data interface:

Data: Spreadsheet of All Permanent Open Market Operations (POMO)

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