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Last POMO Of The Week Ends Without Disruptions, PDs Monetize Just Issued 5 Year Bond

Tyler Durden's picture




 

While the last time there was a major market swing minutes before POMO completion force the Fed to delay the end of that particular POMO after Primary Dealers had to make sure they are going to be guaranteed their hundreds of millions in taxpayer funded capital gains, this time around there was no such issue. Today's monetization of 5 Year Notes closed with $6.580 billion of debt bought by Brian Sack in this week's last POMO (none tomorrow). And in what should not be a surprising development to anyone, the one issue which represented over half of the total operation was the just issued 5 Year QA1 which was placed literally a week ago (highlighted on the table). And so the grand scam continues: the Fed pretends not to be monetizing, the Primary Dealers pretend not to be making millions in preferential Bid terms, and taxpayers pretend to care.

 

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Thu, 04/07/2011 - 11:43 | 1145473 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Crash them all.  Buy silver.

Thu, 04/07/2011 - 11:50 | 1145514 covert
Thu, 04/07/2011 - 11:45 | 1145482 NOTW777
NOTW777's picture

amazing - all the obama business channel can talk about is better than expected retail sales

Thu, 04/07/2011 - 11:46 | 1145486 SDRII
SDRII's picture

dont worry that just means the deflator is going to be negative in the coming upside surprise GDP report

Thu, 04/07/2011 - 12:24 | 1145642 Id fight Gandhi
Id fight Gandhi's picture

Even if retail surprises how will they deal with rising costs, oil and supply disruptions. It's foolish to buy.

Thu, 04/07/2011 - 12:28 | 1145658 Urban Redneck
Urban Redneck's picture

Sooner or later even government motors won't have channel stuffed inventory to pedal if they can't Japan back online.  The out months don't look so good for retail sales without auto production.

Thu, 04/07/2011 - 11:44 | 1145488 LawsofPhysics
LawsofPhysics's picture

Awesome, keep buying silver and gold. Keep the pressure on.

Thu, 04/07/2011 - 11:49 | 1145500 DavidC
DavidC's picture

"....and taxpayers pretend to care".

Tyler, some of us do, and thank Heaven you do, otherwise we would not get to see this.

DavidC

Thu, 04/07/2011 - 12:03 | 1145560 gordengeko
gordengeko's picture

"....and taxpayers pretend to care".

"Tyler, some of us do, and thank Heaven you do, otherwise we would not get to see this."

Japan about to be extinct, 44+ million and counting on foodstamps, daily ass rape continues regardless of natural disasters, market leveraging at all time highs, spx 15 year chart looks like a giant friggin retarded head and shoulders, govern (to exercise continuous sovereign authority over) mental (of relating to the mind) shutdown imminent, oil about to go to $120 barrel crude, gold/silver at all time highs, pimpco dumped 100% US bonds, china is dumping bonds...  Hmmm, long triple leverage spx ETF and double down 401k sounds pretty smart don't you say?

Thu, 04/07/2011 - 11:52 | 1145515 NOTW777
NOTW777's picture

gaps - 12279ish, 1319ish

Thu, 04/07/2011 - 11:54 | 1145517 NotApplicable
NotApplicable's picture

Typical ZH hyperbole!

Those bonds were issued last month!

 

 

 

/sarc

Thu, 04/07/2011 - 11:53 | 1145522 scratch_and_sniff
scratch_and_sniff's picture

lol ZH is advertising "Fish Pedicure's" ...

 

http://tinypic.com/r/t54w1w/7

Thu, 04/07/2011 - 11:56 | 1145531 scratch_and_sniff
scratch_and_sniff's picture

sorry, i know this is a serious topic.

Thu, 04/07/2011 - 11:56 | 1145530 99er
99er's picture

Copper

Big Boyz not buying.

http://www.zerohedge.com/forum/99er-charts-0

 

Thu, 04/07/2011 - 11:57 | 1145535 Cdad
Cdad's picture

Surely, another day of POMO dollars will stop the ground from shaking in Japan, clear up Toyota's supply chain problems...and Apple's problems that way too.  Surely, more gamma ray beams flying around from more poorly run TEPCO plants will lift retails sales, and Americans will shop their way through the crisis.  So says the Street, as echoed by the BlowHorn's [CNBC] perpetual lie machine that is trying to run with "Retailers survived March and will thrive in April" as real earnings only beat Wall Street expectations...but measured by any other tool were poor.

The whole criminal syndicate known as Wall Street/New American Marxist Banker party thing is just more visible some days.  This is one of them.  The disgrace that is the BlowHorn [CNBC] is simply breathtaking today...as $6.58 billion Bernank Ponzi dollars go flying out of future generation's pockets yet again...and no one, save for some ranting Internet twits, says boo about it.

For those banking on QE3...I would suggest you have grossly overestimated how much time before this whole FUBAR situation goes critical...or aka goes TEPCO.

Thu, 04/07/2011 - 12:18 | 1145605 Crack-up Boom
Crack-up Boom's picture

"goes critical ... or aka goes TEPCO"  Cool - bet we'll here about "going TEPCO" a whole lot more.

Thu, 04/07/2011 - 12:25 | 1145621 Cdad
Cdad's picture

Until we purge the DC idiots and the criminal syndicate known as Wall Street from our system, "Going TEPCO" will be standard operating procedure.  

Only when you become convinced that you are smart enough to rule the markets and people, only then are you so incompetent as a result of your arrogance that you can truly go TEPCO.

The equity and bond markets in the US are absolutely primed to go TEPCO.

 

Thu, 04/07/2011 - 12:03 | 1145549 RobotTrader
RobotTrader's picture

Must be a consumer buying panic for sheets, towels, and knick knacks for the bathroom.

Now up 11%, lifetime highs...

Thu, 04/07/2011 - 12:40 | 1145695 Larry Darrell
Larry Darrell's picture

"Must be a consumer buying panic for sheets, towels, ......"

 

This very well could be true, just not in a good way.  After all, when people sense (hyper)inflation, they will begin dumping their dollars to stock up on items they will need going forward.  I know I have been.

 

 

Thu, 04/07/2011 - 13:01 | 1145802 Ricky Bobby
Ricky Bobby's picture

Robo the BBY china trade is on it's last legs. I hate their stores, their concept, their over supply of stupid workers, their fricking volkswagon driving tech support. Cramer will probably be pumping it tonight.

 

Res publica mortuus est, vivat imperium

Thu, 04/07/2011 - 13:16 | 1145873 Bastiat
Bastiat's picture

Maybe the demand was created by so many household balance sheets shitting the bed?

Thu, 04/07/2011 - 12:06 | 1145552 Threeggg
Thu, 04/07/2011 - 12:53 | 1145765 Bastiat
Bastiat's picture

Passionate, I'd say but not losing it.

Thu, 04/07/2011 - 12:02 | 1145558 Cynthia
Cynthia's picture

When Dope Pusher Ben stops injecting high-grade monetary heroin into the veins of Wall Street, hedge funders and other high-stake gamblers will be lying on the floor in the white room with black curtain, seeing silver horses ran down moonbeams in your dark eyes and other sorts of strange things:

http://www.youtube.com/watch?v=uGZeqwdWoeo&feature=related

But hey, as any dope addict on the street knows, detox, though excruciatingly painful and sometimes deadly, is the first step towards functioning without heroin and other sorts of highly addictive drugs from the Fed.

Thu, 04/07/2011 - 12:05 | 1145562 FLIP THAT BOND
FLIP THAT BOND's picture

Was the big jump in the 10 year yesterday due to the SFP unwind being completed and it's no longer helpful in keeping rates low?  If so, what will stop the 10 year from hitting 4% by the end of the month?

Thu, 04/07/2011 - 12:09 | 1145564 gkm
Thu, 04/07/2011 - 12:17 | 1145599 NOTW777
NOTW777's picture

israel intercepting terrorists rockets

http://www.ynetnews.com/articles/0,7340,L-4053837,00.html

Thu, 04/07/2011 - 12:19 | 1145607 ItFarmer
Thu, 04/07/2011 - 12:20 | 1145611 randomq
randomq's picture

When do commmodity prices start becoming a serious problem for the economy?

Thu, 04/07/2011 - 12:26 | 1145623 10kby2k
10kby2k's picture

No worries......they'll expand food stamp program to include gasoline and all persons employed by the federal government.

Thu, 04/07/2011 - 12:19 | 1145617 10kby2k
10kby2k's picture

This shit makes me want to buy a gun...and not for self defense.

Thu, 04/07/2011 - 12:22 | 1145635 Josh Randall
Josh Randall's picture

POMO, POMO, TOGA, TOGA..err..POMO, POMO

Thu, 04/07/2011 - 12:24 | 1145636 Vernon Maxwell
Vernon Maxwell's picture

Tyler (or anyone), help me with the precise inflation mechanism here. Treasury issues new debt>PDs buy new debt>Fed buys just-issued debt from PDs.  Got that.  But how is the Fed's purchase of the just-issued debt from PDs inflationary? 

If the PDs are the initial purchaser of Treasury's newly-created liabilities, then this is no different than any other asset purchase.  That is, they can only buy new issuances with funds/redemption of alternative assets that already exist.  They aren't buying new issuances with newly-created/originary money.  When the Fed remunerates the PDs for those new issues during POMOs (disregarding the notional premium, which I understand would absolutely be inflationary as anything above-par represents originary/uncirculated currency), how are they doing anything but compensating PDs for a purchase they've already made? 

Say Treasury issues $100 of new bonds.  Goldman buys the new issuance, knowing the Fed will buy it back at - at a premium.  But Goldman buys those $100 worth of Treasury notes with $100 (or with $100 worth of assets that it must first sell) that already exists on its balance sheet.  The Fed then buys those $100 worth of notes for $105.  Goldman's balance sheet delta is $5.  I see quite clearly how the $5 premium is inflationary, but I can't reconcile how any part of the $100 is. 

I see the explosion in net gov't liabilities, and a concurrent expansion in the Fed's balance sheet, and I see everyone connecting those two dots. But that third, intermediate dot - specifically, the PDs balance sheet deltas that result from the transaction - confounds me.  What am I missing?

Thu, 04/07/2011 - 14:25 | 1145699 Pseudo Anonym
Pseudo Anonym's picture

how is the Fed's purchase of the just-issued debt from PDs inflationary?

geithner issues t-bills, i.e. face value $100 and then PD buys them with old digits.  PD then "flips" the $100 t-bill to the shtadlan Reb. Benjew Shalom Bernookystein who creates new digits ($100) + "profit" ($5) out of thin air and keeps t-bills. Geithner spends old digits and PD spends new digits+ profit ($105). The monetary base (digits) expanded by $105 That's what you're missing.

Thu, 04/07/2011 - 12:28 | 1145647 High Plains Drifter
High Plains Drifter's picture

http://www.guardian.co.uk/world/2011/apr/07/british-bomb-libya-oilfield

british planes bombing oilfields? i mean wtf? gas prices going up and now this? what the hell is going on , he said facetiously?.......

Thu, 04/07/2011 - 12:42 | 1145715 Urban Redneck
Urban Redneck's picture

That's just Cameron and Sarko fighting for the  "King of the Sandbox" title.  Little Barry is off pouting because he hasn't learned that in the real world they don't give black-gold trophies just for participation.

Thu, 04/07/2011 - 12:46 | 1145729 High Plains Drifter
High Plains Drifter's picture

sarko and cameron want a nobel peace prize......

Thu, 04/07/2011 - 13:01 | 1145796 MiningJunkie
Thu, 04/07/2011 - 13:09 | 1145844 mendigo
mendigo's picture

tyler, it must be difficult to understand the criminal nature of this and yet report it every day

but on the bright side we are witnessing a once in a lifetime event - our own demise. it is best to try to maintain a sense of humor about. your posts crack me up

we need a drastic event to wake-up the public to the dire situation - apparently worlds 2nd largest economy on the ropes doesn't quite measure-up

Thu, 04/07/2011 - 14:08 | 1146064 Bansters-in-my-...
Bansters-in-my- feces's picture

Why don't you's Americans keep pretending to Hang Bernanke by the neck until dead. He likes pretending too... P....Pound

                        O....Orfice

                        M.....Maliciously

                        O....Often

And your going to get it DRY....

Brian ,Your a Sach of shit.

                         

Thu, 04/07/2011 - 14:11 | 1146074 99er
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