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.