Reverse Repo Closes, Whopping $2.2 Billion In Liquidity Taken Out Of Market

Tyler Durden's picture

Today's TOMO has closed, with the Fed conducting a whopping $2.180 billion reverse repo, easily the biggest operation of this nature since 2009, when the Fed commenced comparable liquidity extracting tests. The TOMO consisted of $770 million in Treasury, $710 million in Agency and $700 million in MBS being use a reverse repo collateral, paying 0.09%, 0.1% and 0.14% respectively to the banks involved, undoing the entire $1.6 billion TIPS POMO conducted earlier. It seems that Fed is doing all it can to telegraph that this time it really is done with QE2. In other words 2011 is not 2010, when this movie ran the last time around...

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unwashedmass's picture


how soon do we think Bernanke resigns? I'm betting before yearend, possibly end of summer. Just before the real horror show begins

Bam_Man's picture

Bernanke will step aside shortly. I am very surprised he has lasted this long.

The Fed has painted itself deep into a corner and getting out will be extremely "messy". He will soon hand the mess to some other sociopath megalomaniac, probably citing "health reasons".

Tom Servo's picture

Is another Jew in the on-deck circle to take the reins?

Papasmurf's picture

I'm sure Lloyd Blankein would serve some time in this position as a service to the communiity.

Popo's picture

Let's not forget that Greenspan attempted (briefly) to pull liquidity out of the market, and the market tumbled. Realizing he was f*cked, he resigned and handed the hot potato to Bernanke.

Bernanke knows full well that it is impossible to drain liquidity without collapsing his entire ponzi sham. He will pass the ball to someone else. But not before a few more absurd claims of "tailwinds", "sustainability" and success.

When we see the "Mission Accomplished" moment, you know he's fueling up the Gulfstream. (or more likely just running back to the security of ol' Princeton).

Central planners love to sound erudite and pensive about their policies, when the reality is that they are binary in nature, and in reality have only one setting: Print.

TheMerryPrankster's picture

Bernanke will die in a helicopter accident. The irony will be great, as will the implied warning for his successor.

Cognitive Dissonance's picture

Market doesn't seem to care.


johngaltfla's picture

We got a free market? When, where? I saw a picture on a milk carton years ago, somoene please, show it to me? Where's the wankster when you need him?

myTPisUSD's picture

"do not try to play the markets, its impossible, only try to realize the truth"

"what truth?"

"there is no market

"there is no market?"

"then you will see its not the market that bends, but only the Bernanke"

unwashedmass's picture

wait, amend my last comment. i say ben goes when he's got his plane out on the runway...fully loaded with whatever gold this country has left......

NOTW777's picture

guess mu barack got away with his gold - nothing more is heard

Long-John-Silver's picture

Gold plated Tungsten is $16.98 an ounce today.....

digalert's picture

this time it really is done with QE2

Built on and improved for punch, welcome QE3 the beginning.

ShankyS's picture

"Just pull it."

thedrickster's picture

Pipe down Larry, the BBC isn't yet ready.

LowProfile's picture


Whopping $2.2 Billion In Liquidity Taken Out Of Market



asteroids's picture

At this rate it'll take Ben more than 4 years to shink his balance sheet to something reasonable. He's got to crank it up to $20B per day to make things right. At least.

bbq on whitehouse lawn's picture

You are correct (imho) to question this contraction. Im not sure myself if this was more then accounting magic.

We need to wait for the data on this repo as we do on so many other 'impacts'.

When these repo's impact bonuses and employment we will know truly its 'truthfulness'.

Jim B's picture

WOW! 2 whole billion!!!!

alfred b.'s picture


  Wow indeed.....that's just lunch money, without tip !!!



LawsofPhysics's picture

Sorry, the "movie" still has all the same players, directors, and screenwriters.  Nothing has changed.  A whopping 2.2 billion, really?  How much did they monetize last week alone?

Popo's picture

Bernanke's efforts to seem hawkish are nothing short of laughable. The man must believe he has some credibility left. 2.2 billion? Oh noes!

Yikes's picture

Am I reading the summary right: A 1 day Reverse Repo?  Well gee, I guess Ben was right when he said he was 100% confident he could pull liquidity out of the market when the time came. What more proof do you need.


[shaking head] A 1 day Repo.  Winning!

depression's picture

And people still doubt the Bernankster !

Pump $600 Billion in, and drain $2 Billion out !

MarketTruth's picture

EXACTY as the USA gov spends over $2000 billion a year yet are claiming to be cutting a 'big' decrease of $61 billion. Normally this would be a joke, yet those of you stuck within the USA will be paying the piper sooner rather than later.

AlaricBalth's picture

Temporary open market operations

NotApplicable's picture

Because as we all know, there is no way that operations draining liquidity can be made permanent.

mynhair's picture

Temporary Open Manglement Operation

moriarty's picture

Thanks for my on going education. One day i may be up to speed

NonAggressionPrinciple's picture the time i understand modern finance there will no longer be modern finance..

Regular Guy's picture

Thanks for the link. Great information.

Byte Me's picture


Bloke who sings "It's not unusal.."

Fistfull of worthlessDollars's picture

Turd Obfuscating Market Openness

Boston's picture

"It seems that Fed is doing all it can to telegraph that this time it really is done with QE2. In other words 2011 is not 2010, when this movie ran the last time around..."

Yeah, but what about QE Lite? That looks like it will continue.

And if/when the SHTF (and OK, the pain threshold could be much higher this year), then QE3 will be announced.  America's investing public will demand it.  The Fed will ride to the rescue and voila, the reflation trade will begin anew.

ehildret's picture

The fed's play to save face is to blame the crash/dollar demise on Congress/Treausry when they start screaming for more QE (heroin) thus; crash and dollar demise to be laid at the feet of congress.

FunkyMonkeyBoy's picture

I love the way they have gold pegged down like a muzzled dog.

Yardfarmer's picture

take consolation Monkey Boy, apparently Au has a lot more potential downside than most of us think, and infinitely more upside.

falak pema's picture

Gold is like the muzzled dog...It's the PDs who decide if and when he gets unleashed, as their spear carrier at the FED can manipulate the markets using their PD channels to counter small investor movements, however rational, by blocking it massively in parallel, paper PM markets controlled exclusively by them; false flag trick per se. Only when the market tsunami unfurls, that's when the FED/PD barrier folds in, like in reality...But we're not there yet...Benocide is still king of the heap...The Bastille is still's not yet toast. According to Ben it'll never be. That's the current FED mantra!

Bam_Man's picture

"Pegged down" like a beachball under water.

defn8Dog's picture

Maybe clips of Wiley Coyote off-the-cliff will be featured while it's still funny.    

ehildret's picture

I think I read somewhere that Gross was going to start buying the MBS from the fed, for pennies on the dollar.  Could be PIMCO was the buyer of the MBS today...  just thinking 

strannick's picture

Since you guys are in an explanatory mood, what the @#%& is a Reverse Repo?


AlaricBalth's picture

From FRB NY:

The Fed uses repurchase agreements, also called "RPs" or "repos", to make collateralized loans to primary dealers. In a reverse repo or “RRP”, the Fed borrows money from primary dealers. The typical term of these operations is overnight, but the Fed can conduct these operations with terms out to 65 business days.

  • The Fed uses these two types of transactions to offset temporary swings in bank reserves; a repo temporarily adds reserve balances to the banking system, while reverse repos temporarily drains balances from the system.
  • Repos and reverse repos are conducted with primary dealers via auction. In a repo, dealers bid on borrowing money versus various types of general collateral. In a reverse repo, dealers offer interest rates at which they would lend money to the Fed versus the Fed’s Treasury general collateral, typically Treasury bills.