New York Fed Announces It Will Conduct 7 POMO Operations Beginning July 1 As Part Of Continuing QE Lite

Tyler Durden's picture

Just as expected, the New York Fed disclosed that even as QE2 is being halted (briefly),  QE Lite purchases of maturing securities will continue, across the Fed's 7 maturity segments: "At this time, the Desk
anticipates conducting one operation per month in each maturity sector."  As we have calculated before the total amount of monthly "flow" purchases will be about $32 billion, and likely declining, as less and less MBS are prepaid to the Fed. In other words, the bulk of purchases will once again be at the belly, with the least amount dedicated to the long-end, followed only by the 1.5-2.5 year segment, which however, if Bill Gross is right, will see a surge in activity as soon as Operation Twist 2 is announced at this year's Jackson Hole meeting.

From the New York Fed:

Statement Regarding Purchases of Treasury Securities

On June 22, 2011, the Federal Open Market Committee (FOMC) directed
the Open Market Trading Desk at the Federal Reserve Bank of New York
(the Desk) to complete purchases of $600 billion of longer-term Treasury
securities by the end of June.  The FOMC also directed the Desk to
maintain its existing policy of reinvesting principal payments on all
domestic securities in the System Open Market Account in Treasury
securities in order to maintain the total face value of domestic
securities at approximately $2.6 trillion.

Under the existing
reinvestment policy, principal payments from agency debt and agency
mortgage-backed securities (MBS) are reinvested in longer-term Treasury
securities.  In implementing this policy going forward, the Desk will
follow operating practices similar to those established during the $600
billion Treasury purchase program.

Purchases will be allocated
across maturities according to a distribution that is nearly identical
to that executed under the Treasury purchase program.  The only change
to the distribution is that the two maturity sectors beyond 10 years
from the earlier purchase program will be combined into a single
maturity sector of 10 to 30 years in order to achieve greater
operational simplicity.  Specifically, the Desk plans to distribute
purchases across seven maturity sectors based on the following
approximate weights:

Nominal Coupon Securities by Maturity Range*

TIPS**

1½ -2½
Years

2½-4
Years

4-5½
Years

5½-7
Years

7-10
Years

10-30
Years

1½-30
Years

5%

20%

20%

23%

23%

6%

3%

*The
on-the-run 7-year note will be considered part of the 5½- to 7-year
sector, and the on-the-run 10-year note will be considered part of the
7- to 10-year sector.
**TIPS weights are based on unadjusted par amounts.

The size
and frequency of operations will be reduced to levels commensurate with
agency debt and MBS principal payments.  At this time, the Desk
anticipates conducting one operation per month in each maturity sector.

The
Desk will continue to release a tentative schedule of purchase
operations on or around the eighth business day of each month, with each
schedule providing information on the operations expected to take place
through the middle of the following month.  The next schedule will be
released on July 13, 2011.

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qussl3's picture

2 a days to 2 a week.

This is gonna be fun.

Ahmeexnal's picture

Gold and silver are taking off.

By the time shepple decide to get off their asses and drive their BMWs to the coinshops, it will be too late for them.

Expect self-immolations to go viral as their eyes finally start to open.

Dr. Richard Head's picture

Just wait until the CONgress votes to raise the debt ceiling in a few months.  WEEEEEEEE!!!!!!!!!!!!!!!

HungrySeagull's picture

They would not dare.

If they do vote that increase, One side of me is gonna be laughing hysterically and the other side will be really crazy.

They have rubber lined rooms for that problem.

trav7777's picture

no way the gov can fund unless they are lying

NotApplicable's picture

Well, it's obvious they're lying, their lips are moving.

As for the funding, that all depends on the script. I bet they could clandestinely fund if they wanted to, but with election season approaching and an angry electorate, they are going to bring on some pain, and blame it all on the opposition (primarily the Tea Party).

oogs66's picture

will they ever tell us what prices they paid?

financeguru500's picture

Considering the people who have the largest share in the privately owned federal reserve, I'd guess pennies on the dollar.

camaro68ss's picture

is there a cap to this" QE lite"?

NotApplicable's picture

Yes. Unfortunately, it's roughly the size of the US real estate market as denoted by Fannie/Freddie paper.

financeguru500's picture

So all that talk a few months ago about quitting the purchasing of treasuries was just fluff? Pretty much the equivalent of a meth addict telling the police that they promise not to buy any more meth and then a week later the cops catch them again.

Max Hunter's picture

So all that talk a few months ago about quitting the purchasing of treasuries was just fluff?

It actually use to be called lying.. but who's counting..

jerry_theking_lawler's picture

your analogy is slightly off....they don't buy the meth...they get the crazy little cousin to buy it for them....

firstdivision's picture

Just like QE1 -> QE1.5 -> QE2 -> QE2.5 -> QE3 -> ∑ QEnxn

camaro68ss's picture

Cocanine is for bitchez, its all about shotting meth, its all the craze

j0nx's picture

WTF is shotting meth? Do you mean shooting meth or is shotting some new kind of way to drink meth?

blunderdog's picture

Give him a break, man, he was tweekin' when he typed that.

Shock and Aweful's picture

And so it continues....until it can't any longer...

 

Then what?

YesWeKahn's picture

This must be the QE3 everyone was talking about.

Dr. Richard Head's picture

Everyone?  I was traveling down south a few months back and had to stay the night at a Lexington Kentucky Embassy Suites.  It just so happens that Bank of America was having a party for their bankers (commercial and home) to show their employees their appreciation.  Being a smoker, I stepped outside to have a smoke and happened upon a group of those bankers outside as well. We all started chatting over the normal polite conversation that ensues when people first meet.  When I found out that they were bankers and had an opportunity to ask a question of them I asked, “So do you think the Fed will roll QE3 out at the end of June?”  The look on their faces was as if I asked them a question about quantum physics. 

One of the bankers finally said, “QE?  Are you talking about that road in Toronto?” 

I fieldstripped my cig, threw it into the trash, and just walked away laughing my ass off.  We is fucked ladies and gentleman. 

Silver Dreamer's picture

Most bank employees are mindless sheep too.  Who thinks anymore anyway?  It's so outdated...

Dr. Richard Head's picture

Indeed.  Sometimes the idea of a nonthinking exsience seems like such bliss.  It sucks seeing through the lies in every media outlet and the ignorance of the people that follow those lies.

 

Bunch of fractional reserve pussy automatrons.  Sighhh

GtownSLV's picture

The Russians and Chinese are. Soon they'll be selling US paper by the ton!

macholatte's picture

 

 The people at the local branch office are no better than the guy on the assembly line. It's still factory work. But I bet a UAW guy can tell you a lot more about the mechanics of cars and trucks than a branch manager can tell you about money. These are not the droids we're looking for.

 

Nothing in the world is more dangerous than sincere ignorance and conscientious stupidity.
Martin Luther King, Jr.

 

 

Dr. Richard Head's picture

I would expect it from the tellers of course.  However, I went to transfer my money from a large bank (had the acocunt prior to my understanding of monetary and fiscal policy) and I wanted to talk to the Branch Manager about their Profit and Loss statement.  I had some questions about exposure to a variety of different risk assets that stood on their sheet.  The same look of utter confusion was upon her face. 

I still went with that bank since they have a strong Texas Ratio and they were a smaller regional bank, but it pisses me off that someone working in the financial industry has no fucking clue what the hell they are doing other than selling "savings" accounts. 

cgbspender's picture

One of my roommates once asked the branch manager of a local Sun Trust if the bank was solvent. She displayed a confused look and replied "What does solvent mean?"

 

True fucking story.

Raymond Reason's picture

Had a conversation with the manager of my local bank a while ago.  He said he'd heard the term "fractional reserve banking", but wasn't sure exactly what it refered to . 

j0nx's picture

This is not the QE3 you're looking for. Move along.

dcb's picture

Qe to infinity and beyond!!!!

virgilcaine's picture

'twist' operation starting, just as a trillion in eu debt is about to go bust. See you at Dawg 8k.

statlawyer's picture

Here comes the levitation lolz

yogibear's picture

True to Bernanke's college thesis he will print. Too bad if he's wrong. Those in the Whitehouse and in the media will blame somebody else.

Ahmeexnal's picture

Greeks seem to have already been setup by the power-elite -and their lackeys- as the culprit: lazy, dirty, cheating, backward, stealing money from "hardworking northern people" *puke*.  Racism at it's most vulgar display.

The solution the power-elite have planned: Take the land and gold from the greeks, and ship the greek people to Fukushima.

macholatte's picture

The community organizers have been paid off. Move on to Italy.

LawsofPhysics's picture

Perpetual QE is an important part of financial repression.  Unfortunately, only a relative few benefit.  "Mark to unicorn" accounting etc. will continue until Atlas shrugs.  Hedge accordingly.

gwar5's picture

FRBNY, misdirection from Benny and the inkjets.

Bernanke must really be feeling heat for all the QE.

He'll get over it.

101 years and counting's picture

$32 billion?  ROFL.  Wasnt the last "QE Lite" portion of the POMO schedule about $12 billion for a month?

Dr. Richard Head's picture

The required dosage just keeps getting bigger and bigger, just like my pile of gold and silver. 

Josh Randall's picture

QE Lite = great POMO, less filling

starfish's picture

As Expected? I remember Jim Rickards bringing this up a few months ago and Tyler having a disagreement with him regarding the whole stock and flow thing.  I suppose it's a moot point. It is the way it is...

HpDeskjet's picture

True, actually Bernanke himself already said months ago that they were planning to keep the size of the balance sheet unchanged... Compared the last 8 months this means tightening for about $80 bln per month, very curious how risky assets will hold up!

 

 

SRV - ES339's picture

So, Rickards was right... QE to infinity!

Just as expected

... didn't you take the other side (outright QE 3) on this Tyler?

Everybodys All American's picture

QE lite ... means anytime I feel the need. QE Infinite.

Everybodys All American's picture

This will end in a spectacular crash ...

GoldVsFRNdotCOM's picture

I absolutely hope so, one the likes of which humanity has never dreampt of.

baserunr's picture

Don't poor Brian Sack and his teenage assistants even get a vacation?  They too are doing God's work you know.  Just ask Lloyd!

High Plains Drifter's picture

WTF !  Again with the QE lite?