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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 | Link to Comment NOTW777
NOTW777's picture

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

Thu, 09/30/2010 - 16:09 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment cswjr
cswjr's picture

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

Thu, 09/30/2010 - 11:37 | Link to Comment TooBearish
TooBearish's picture

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

Thu, 09/30/2010 - 11:37 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment john_connor
john_connor's picture

flash crash, part II?

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

Trends in line.

Thu, 09/30/2010 - 12:21 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment Headbanger
Headbanger's picture

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

Thu, 09/30/2010 - 12:48 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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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