Liberty 33 To Get Busy (Officially) On August 17 When It Will Begin Purchases Of 2 Thorugh 10 Year Treasurys

Tyler Durden's picture

Just released by the New York Fed:

On August 10, 2010, the Federal Open Market Committee directed the
Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New
York to keep constant the Federal Reserve’s holdings of securities at
their current level by reinvesting principal payments from agency debt
and agency mortgage-backed securities (agency MBS) in longer-term
Treasury securities.  The most recent H.4.1 data release indicates that
outright holdings of domestic securities in the System Open Market
Account (SOMA) totaled $2.054 trillion as of August 4, 2010.  The Desk
will seek to maintain the face value of outright holdings of domestic
securities in the SOMA at approximately this level.  Due to differences
in settlement dates for purchases and principal payments, it is
anticipated that the actual level of domestic securities held will vary
around this level to some degree.  

In the middle of each month, the Desk will publish a tentative
schedule of purchase operations expected to take place through the
middle of the following month, as well as the anticipated total amount
of purchases to be conducted over that period.  The anticipated total
amount of purchases will be calibrated to offset the amount of
principal payments from agency debt and agency MBS expected to be
received over that period.  The announcement will occur shortly after
the monthly releases of current MBS factors from Fannie Mae, Freddie
Mac, and Ginnie Mae, allowing the Desk to anticipate the principal
payments to be received by the SOMA portfolio over the period.

The first tentative schedule of purchase operations and the
anticipated total amount of purchases to be conducted through the
middle of September will be published tomorrow, August 11, at 3 p.m. 
The purchase schedule will include a list of operation dates,
settlement dates, security types to be purchased (nominal coupons or
TIPS), and a maturity date range of eligible issues for each scheduled
operation.  The Desk expects to begin purchasing Treasury securities
under this policy on or around August 17.

The Desk will concentrate its purchases in the 2- to 10-year sector
of the nominal Treasury curve, although purchases will occur across the
nominal Treasury coupon and TIPS yield curves.  The Desk will
typically refrain from purchasing securities for which there is
heightened demand or of which the SOMA already holds large
concentrations. 

Purchases will be conducted with the Federal Reserve’s primary
dealers through a series of competitive auctions via the Desk’s
FedTrade system.  The exact list of securities eligible for purchase
will be made available at the beginning of each purchase operation. 
The results of each operation will be published on the Federal Reserve
Bank of New York’s website shortly after each purchase operation has
concluded.

And the FAQ on the debt's most recent monetization is here.