Today's POMO is over: at $2.069 billion, the operation was right in line with our expectations, coming in at a lofty 12.16 submitted to accepted ratio, as investors apparently are not too crazy about the yield perspective of the 4 2013 CUSIPs that were repruchased. However, what is far more important is that with holdings of $821.1 billion, the Fed is now officially the second largest holder of US Treasurys. Next up- China.
While the official breakdown will likely be a few weeks late in coming, here is the math:
Fed holdings as of September 30: $811,669
- POMO - September 30 (October 1 settlement): $2,200
- POMO - October 5: $5,190
- POMO - October 6: $2,069
Total: $821.128 Billion, which compares to Japan total $821.0 Billion as of July 2010
Congratulations, America: your central bank is just $25 billion away from being the Treasury's largest creditor, and thus able to dominate any and all future debt restructuring negotiations with what is, essentially, itself.