Open Market Operations

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Presenting The World's Most Profitable Hedge Fund Ever: FRBNY LP





When one has $2.9 trillion in costless AUM (because if the cost is breached, one just doubles down, especially if one prints the money), it is not all that surprising to generate $77 billion in profits in one year (think of the hubris emanating from that particular year end letter), or even $385 billion in profits in the past 10 years. Yet it is still a stunning number considering the rest of the $2 trillion hedge fund industry lost about 10% in 2011. Which is why we all bow down to what is without doubt the world's most lucrative and profitable generator of P&L in history: the Federal Reserve, which for the second year in a row has printed (pun intended) over $70 billion in profits. And who is the lucky LP? Why the US Treasury of course, which for the second year in a row will pocket all the proceeds from PM Ben's immaculate trading perfection. Of course, there is one caveat for this spotless performance sheet: what happens when Fed interest expense surpasses interest income? But why worry - everyone tells us this can never happen, so it obviously can never happen...

 
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China Will Suspend Open Market Operations Tomorrow In Response To Liquidity Freeze





Merely minutes after reporting the third daily surge in the SHIBOR we see a Dow Jones update which confirms that this liquidity escalation is far more serious than a merely transitory jump in short-term lending rates. Per DJ: "China's central bank said Wednesday it will suspend its regular open market operation Thursday, in an apparent response to the tight liquidity conditions in the banking system." As a result of the just reported 7 Day SHIBOR hitting 8.81%, the highest since October 2007, the PBoC will not conduct regularly scheduled open market operations tomorrow when it offers three-month paper, to mop up excess liquidity in the country. "The PBOC sold CNY1 billion ($154.6 million) worth of one-year bills at 3.4019% in its operation Tuesday, after leaving the rate unchanged at 3.3058% for the past 11 weeks. On Thursday last week, the PBOC lifted the rate on its three-month bills by eight basis points to 2.9985%, the first increase on the three-month central bank bill yield since early April. "It is difficult for the central bank to find enough demand for its short-term bill offering amid the severe liquidity squeeze in the money market. If it persisted with the three-month bill offering tomorrow, the yield would jump again, adding pressure to the central bank's operating costs," said a Shanghai-based trader with a local bank."

 
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Open Market Operations And Statistics





Zero Hedge presents its statistical findings regarding US Treasury Auctions and Permanent Open Market Operations

 
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Federal Reserve Open Market Operations: June 12





The chart below indicates the Fed's YTD open market treasury purchases. Roughly $32 billion in bonds/bills has been bought since the last update 2 weeks ago. The chart below can be traced back the Federal Reserve of New York's website here.

 
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Federal Reserve Open Market Operations: June 12





The chart below indicates the Fed's YTD open market treasury purchases. Roughly $32 billion in bonds/bills has been bought since the last update 2 weeks ago. The chart below can be traced back the Federal Reserve of New York's website here.

 
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The Federal Reserve's Open Market Operations





As recently many questions have arisen as to the involvement of the Federal Reserve in bond (and other) markets, I present the data provided by the Federal Reserve of New York regarding the Fed's Open Market Operations. The charts below summarize the individual (single-serving if you will) and cumulative purchases across both Treasuries and Agencies. In a nutshell, for 2009, the Fed has purchased $131 billion Treasuries and $63.8 billion Agencies.

 
Tyler Durden's picture

The Federal Reserve's Open Market Operations





As recently many questions have arisen as to the involvement of the Federal Reserve in bond (and other) markets, I present the data provided by the Federal Reserve of New York regarding the Fed's Open Market Operations. The charts below summarize the individual (single-serving if you will) and cumulative purchases across both Treasuries and Agencies. In a nutshell, for 2009, the Fed has purchased $131 billion Treasuries and $63.8 billion Agencies.

 
Tyler Durden's picture

The Federal Reserve's Open Market Operations





As recently many questions have arisen as to the involvement of the Federal Reserve in bond (and other) markets, I present the data provided by the Federal Reserve of New York regarding the Fed's Open Market Operations. The charts below summarize the individual (single-serving if you will) and cumulative purchases across both Treasuries and Agencies. In a nutshell, for 2009, the Fed has purchased $131 billion Treasuries and $63.8 billion Agencies.

 
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