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POMO Ramp Concludes As Fed Buys Back A Disappointing $2.2 Billion, As Just $11.5 Billion Are Submitted

Tyler Durden's picture




 

Well, so much for that ramp: after spiking by well over 100 points, the DJIA is now down notably for the day. A big reason for this was that today's POMO was a big disappointment: only $11.5 billion in higher yielding bonds were submitted to the Fed for repurchase, as it appears Primary Dealers would rather hold on to the best yielding paper currently available than hand it back to Brian Sack. This may have rather unpleasant implications for the Fed which will soon monetize across the curve, as it demonstrates that there is very little monetization interest in the long, and thus higher yielding, end, which in turn will force the Fed to monetize ever more short maturity debt. As a result, the Fed ended up purchasing a paltry $2.2 billion, and Apple Netflix, Amazon are already suffering as a result of the EOM profit taking starting to hit the quants, many of whom have been in unwind mode all September. With the next POMO now scheduled for an eternity from today, on October 5, today's market action could be very volatile.

 

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Thu, 09/30/2010 - 11:32 | 615542 NOTW777
NOTW777's picture

time for a pullback; took off almost all my longs and even PM equities

Thu, 09/30/2010 - 16:09 | 616508 LowProfile
LowProfile's picture

Word.

No mo' POMO until next Wednesday.  Could get ugly.

Only thing I'm looking to do is break even on this short (my bad for even trying), get an entry for my final physical PM purchase, then I'm leaving Las Vegas for good.

Let it burn.

Thu, 09/30/2010 - 11:32 | 615543 bob_dabolina
bob_dabolina's picture

Ben Bernanke wants to know whos ass is getting whipped in the basement for the market being down.

Thu, 09/30/2010 - 11:35 | 615554 HelluvaEngineer
HelluvaEngineer's picture

Analysts expected $5B in government price manipulation, only got $2.2B.  Major miss.  Market down.

Thu, 09/30/2010 - 11:43 | 615584 cswjr
cswjr's picture

LOL! So true.  The only data release that really matters.

Thu, 09/30/2010 - 11:37 | 615567 TooBearish
TooBearish's picture

Less than 200MM per PD o boy.......

Thu, 09/30/2010 - 11:37 | 615568 curbyourrisk
curbyourrisk's picture

How much we have to lose today for September to go negative?????  How cool would that be!!!!!!

Thu, 09/30/2010 - 11:42 | 615580 Roy Bush
Roy Bush's picture

What are these CUSIP numbers?  What exactly is the Fed buying....somebody please help out the less informed.

Thu, 09/30/2010 - 11:52 | 615611 Atomizer
Atomizer's picture

You'll need to order a Ovaltine Secret Decoder Ring to determine the CUSIP origination.

 

 

Thu, 09/30/2010 - 11:43 | 615583 E pluribus unum
E pluribus unum's picture

The bots are fighting with each other. The first bot out wins!

Thu, 09/30/2010 - 11:44 | 615589 Caviar Emptor
Caviar Emptor's picture

These days a 30-point down Dow day feels like all hell breaking loose

Thu, 09/30/2010 - 11:46 | 615596 Dr. No
Dr. No's picture

I thought the QElite was based upon "profits" from the toxic mortgage backed securities.  It would appear, with a less than expected purchase by the fed, they didnt profit as much as we were lead to believe.

Thu, 09/30/2010 - 11:48 | 615603 Clark_Griswold ...
Clark_Griswold Hedge Mnger's picture

So with a less than expected POMO, end of mth & quarter, time for a little correction.... the question is how many points will be cashed out this time....this is going to be interesting to watch today.

Thu, 09/30/2010 - 11:50 | 615605 espirit
espirit's picture

Still waiting to see if they junk the DX all the way down to 75 like last year, to prime the pump in October.

Seems like they are saving the remaining boolits to use on each other.

Thu, 09/30/2010 - 11:52 | 615612 Ethics Gradient
Ethics Gradient's picture

OK, so the Wall Street thing isn't going as planned whilst there's no yield. Interest rates aren't going up any time soon, so what to do?

If you're a dyed in the wool Keynsian but you know that what really needs to happen is that people need jobs, just start buying up some of the unused capacity.

They could even spend money installing whatever it is they bought (cows, computers, sewage treatment plants) installing it in Africaland and not be accused of trade violations.

That should create a pretty new bubble and kick the can down the road a bit further.

 

Thu, 09/30/2010 - 12:07 | 615664 john_connor
john_connor's picture

flash crash, part II?

Thu, 09/30/2010 - 13:02 | 615850 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Trends in line.

Thu, 09/30/2010 - 12:21 | 615707 crosey
crosey's picture

Well, we're all out of POMO Red Bull.  What else have we got...Monster, 5 Hour Energy, AMP?

Thu, 09/30/2010 - 12:24 | 615721 davidsmith
davidsmith's picture

This is what I meant when I said that the United States no longer has an interest in keeping the stock market up.  Do you  get it now?  Let's see if you do.

Thu, 09/30/2010 - 16:21 | 616545 SheepDog-One
SheepDog-One's picture

I agree, the 800 point Sept DOW pump was supposed to pick up Obama and Clowngress' disastrous approval ratings, yet has only caused the insolent peasantry to become more angry. Pumping the markets has become a game with -0- returns. It wont go on and on, but will be reverse-coursed quickly as the last gasp of an in-trouble power structure is to throw fear and panic at the people which is what I totaly believe is coming for Oct.

Thu, 09/30/2010 - 12:30 | 615737 Quinvarius
Quinvarius's picture

What are the implications of a failed POMO?  Lack of supply?  Maybe someone who owns treasuries would rather dump them on a day when the Fed isn't ready and waiting? 

Thu, 09/30/2010 - 12:30 | 615738 D-Falt
D-Falt's picture

So assuming people stop selling high-yield bonds to the FED, what other options do they have for QE2?  Shorter term, lower intrest bonds make less efficient targets.  They will have to buy more.  I don't think they'll get the gas milage they originally planned on.

Thu, 09/30/2010 - 12:47 | 615807 Headbanger
Headbanger's picture

POMO party over now!!  Please don't all rush for the exits at once!!

Thu, 09/30/2010 - 12:48 | 615810 shushup
shushup's picture

PD's not doen for the day yet. Waiting for sellers to subside (like everyday) and then buy the dip ramping back up to todays high.

Thu, 09/30/2010 - 13:12 | 615883 alien-IQ
alien-IQ's picture

oh I don't think this minor inconvenience is gonna prevent them from performing their 3pm magic.

Like clockwork so far: 10am HOD/12pm LOD/ flat til 3pm and a moonshot from there.

Thu, 09/30/2010 - 16:22 | 616548 SheepDog-One
SheepDog-One's picture

Hmmm nope. Maybe tomorrow theyll be able to pump the garbage, or flash crash it. Coin toss.

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