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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Mr Lennon Hendrix's picture

Crash them all.  Buy silver.

NOTW777's picture

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

SDRII's picture

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

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.

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.

LawsofPhysics's picture

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

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.


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?

NOTW777's picture

gaps - 12279ish, 1319ish

NotApplicable's picture

Typical ZH hyperbole!

Those bonds were issued last month!





scratch_and_sniff's picture

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

scratch_and_sniff's picture

sorry, i know this is a serious topic.

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 $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.

Crack-up Boom's picture

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

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.


RobotTrader's picture

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

Now up 11%, lifetime highs...

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.



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

Bastiat's picture

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

Bastiat's picture

Passionate, I'd say but not losing it.

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:

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.

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?

randomq's picture

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

10kby2k's picture

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

10kby2k's picture

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

Josh Randall's picture


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?

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.

High Plains Drifter's picture

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

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.

High Plains Drifter's picture

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

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

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




And your going to get it DRY....

Brian ,Your a Sach of shit.