Your One-Stop Guide To Frontrunning Monday's Double POMO
On Monday, Brian Sack will go for an all-out onslaught of Netflix and Amazon shorts. For the first time ever the New York Fed will hold not one but two monetization procedures. Incidentally both will focus on the part of the curve that in the past two weeks has been performing best: the sides of the belly. The two operations, expected to be about $2 and $7 billion, will focus on bonds in the 10-17 Y and 2.5-4 Y sector. In keeping with the tradition of sharing with our readers the bonds that Sack will almost certainly end up monetizing, we present the 10 cheapest bonds that will likely end up being acquired on Monday. As the Fed is now the largest single holder of Treasurys (since the announcement of the SOMA reinvestment program on August 10, the NY Fed has purchased a total of $124bn Treasuries / TIPS: of the $105bn scheduled for the current month, the Fed has purchased $48bn per MS) expect to see increasingly more detailed analyses of the Fed's SOMA composition as cartoons about how to front run the Fed become increasingly more popular.
It is only fitting that on the near end, the bond most likely to be monetized is the just issued (November 8) PU8 (3Y).
Below is a detailed summary of all QE2 OMOs via Morgan Stanley.
A detailed look at the long-side of Monday's second POMO:
The best cheat sheet available at the moment for future monetizations:
And a summary analysis of all 2009 and 2010 POMOs: