Fed Now Pre-Monetizing: Bernanke Buys $300 Million Of Treasury To Be Auctioned Off Tomorrow

Tyler Durden's picture


There was a time when the Fed would repurchase freshly issued bonds a month, a week, or even a day after they were auctioned off by the Treasury (to avoid that whole perjury-inducing "no monetization" stigma). That's no longer the case. Moments ago the Fed concluded its most recent POMO as part of the now unsterilized QE4EVA, focusing on 2036-2042 maturities, i.e., the long-end. A quick look at the issues bought shows that the one CUSIP most put back by dealers to the Fed was the 912810QY7 30 Year. Curiously this is precisely the same CUSIP that, despite the debt ceiling being breached and all, will be auctioned off... tomorrow. Granted, it is a reopening (29 year, 10 month issue), but in a world in which nothing financial makes sense, and idiots come up with debt ceiling avoidance "schemes" that could have rolled right off a Lewis Black rant, we prefer to think of its as pre-monetization, much the same as pre-crime. That said, our hopes that Spielberg will consider putting the script of Monetization Report into a movie, with Paul Giamatti reprising the role of the man who prints the world, will likely not come true.

Note the highlighted Cusip just monetized by the Fed...

... And the link to tomorrow's 912810QY7 auction.

Finally, since the Fed is no longer in the sterilized monetization business, but has reverted to the bazooka approach, it means POMO days are once again critical as then the Primary Dealers will end up with substantial cash dry powder, to be used to ramp stocks and for other general excess reserve permitting purposes.

Which is why here is the full calendar of January POMO dates: it may not be a good idea to be short stocks on any of the days listed below.

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Wed, 01/09/2013 - 12:25 | 3136699 achmachat
achmachat's picture

ah! this explains the sell-off of precious metals.

of course.


Wed, 01/09/2013 - 12:31 | 3136724 Danks18
Danks18's picture

I guess no shorting on any day in January then?

Wed, 01/09/2013 - 12:43 | 3136782 MillionDollarBoner_
MillionDollarBoner_'s picture

Jan 21st and 30th look good to me :O)

Wed, 01/09/2013 - 12:56 | 3136827 NotApplicable
NotApplicable's picture

Anyone else notice that the three day silver chart shows that the last two days are practically a mirror image of each other? (gold roughly does too, but not as dramatic as silver)



Wed, 01/09/2013 - 13:12 | 3136890 NotApplicable
NotApplicable's picture

So... did Benron just invent a new method of "float?"

Wed, 01/09/2013 - 13:15 | 3136898 The Juggernaut
The Juggernaut's picture

When the Fed Res. undwinds these T-holdings... who the fuck is the buyer?!?!  End Game.

Wed, 01/09/2013 - 13:26 | 3136944 ToNYC
ToNYC's picture

They always call the Black Swan, the 800 lb gorilla in the room that is taken for 'granted', the new End Game. Avoiding Reality makes US free of a natural solution, on Earth, where the fake one always fails.

Wed, 01/09/2013 - 13:31 | 3136971 whotookmyalias
whotookmyalias's picture

F*** him! Turn those machines back on! Turn those machines back on!

Wed, 01/09/2013 - 13:44 | 3137026 fuu
fuu's picture

Only 37.75-46.00 Billion over the next 3 weeks?

C'mon Ben we are never going to get prosperous at that rate you lazy fuck.

Wed, 01/09/2013 - 15:43 | 3137702 Panafrican Funk...
Panafrican Funktron Robot's picture

Why would they unwind the T-holdings?  It's a red herring dude.  There is no unwind.  Ever.


Wed, 01/09/2013 - 13:18 | 3136908 Manthong
Manthong's picture

NOW pre-monetizing ? 

WTF have the trillions of  fake cap and term-jerking until now been:?

Wed, 01/09/2013 - 13:46 | 3137032 NotApplicable
NotApplicable's picture

Why that would fall under the category of traditional monetizing.

And you know how the Bernank likes his traditions!

Wed, 01/09/2013 - 13:10 | 3136884 Danks18
Danks18's picture

MLK on the 21st, but you are right about the 30th.  That's the day.  Dump on.

Wed, 01/09/2013 - 13:08 | 3136878 Snakeeyes
Snakeeyes's picture

They just can't wait. The robber barons at their finest!!!!


Wed, 01/09/2013 - 12:40 | 3136767 disabledvet
disabledvet's picture

Actually it's a highly sophisticated Insider Trading enterprise. "Before even the instrument is available they can trade in it." Who knew? I'm sure the SEC will be all over this soon...

Wed, 01/09/2013 - 16:16 | 3137882 Panafrican Funk...
Panafrican Funktron Robot's picture

Funny that they only present the par values.  Looks like there's a theoretical potential markup (based on topline 1.75 bln vs. 1.54 par accepted) of 13.6% built-in.  

Wed, 01/09/2013 - 12:41 | 3136774 AccreditedEYE
AccreditedEYE's picture

Buying opportunity.

Wed, 01/09/2013 - 12:45 | 3136796 Mrmojorisin515
Mrmojorisin515's picture

Don't know if you have read any FOFOA, but the thoughts of another way back in 1999 make the most sense with regards to them.  I haven't heard any other explanations for precious metals that make more sense.  Worth a read, they suggest not paying attention to the paper price

Wed, 01/09/2013 - 12:28 | 3136707 SheepDog-One
SheepDog-One's picture

'Concentrating on 2042'


Wed, 01/09/2013 - 12:27 | 3136708 Lost Wages
Lost Wages's picture

Ben is so excited about the auction tomorrow a little pre-cum came out.

Wed, 01/09/2013 - 12:47 | 3136804 ZippyBananaPants
ZippyBananaPants's picture

When I started reading Zero Hedge several years ago I was unaware of all this shit, I was doing a search about what the fuck a POMO was, any why the market always skyrocketed when the fed did one.  Since that day, I read the Hedge every day.  What I am having trouble with now is when in the fuck or who in the fuck is going to stand up and stop all this blatant horseshit!  I am trying to manage money for clients by looking at the overall picture of what is going on in the world, and this crap goes on every day and unless you dig (thank you Zero Hedge), the world is oblivious to it all, aka; what is Kim (the fat ass one) Kardishian doing? Or better yet the little kid on the commercial who can "wave my hand, and shake my head" at the same time (I kind of like that one).  


I guess I will keep reading real news, and spreading the word!

Wed, 01/09/2013 - 12:59 | 3136836 NotApplicable
NotApplicable's picture

As far as client management goes, Ann Barnhardt set a fine example.

Anybody keeping their wealth within this system only further feeds the beast.

Wed, 01/09/2013 - 13:00 | 3136841 inkarri9
inkarri9's picture

The trend is your friend until it's not.  It's not just the Fed but just about every CB that can print/ease/stimulate is doing it.  The majority Americans are too dumb, ignorant, don't care or are playing the game and don't want to do anything about what is really going on.  I think about the fact that QE4 and QE4s going on now is not that much different than QE1 yet the economy is doing better now than it was in 2009?  I don't buy that.  If that were true, there would be no reason for the Fed or other CBs to be this "easy". 

Wed, 01/09/2013 - 13:06 | 3136872 philosophers bone
philosophers bone's picture

We need to consider whether there could be some sort of "fraud on the market" claim at some point.  I have no doubt that when the "end game" happens, the Fed will mislead the public in its public statements and/or manipulate the markets to push sheep in one direction and then profit by going the other way (as they do now on a smaller scale). Civil remedies will be difficult in terms of proving reliance / damages, etc., but at a minimum profits should be disgorged, they should pay monetary penalties and the individuals involved should lose their freedom.

Wed, 01/09/2013 - 13:32 | 3136974 Silver Garbage Man
Silver Garbage Man's picture

Do your clients a big favor and get silver in their pockets ASAP.

Wed, 01/09/2013 - 13:56 | 3137071 Yikes
Yikes's picture

Don't fight the Fed.  Really. 

Wed, 01/09/2013 - 16:25 | 3137941 Panafrican Funk...
Panafrican Funktron Robot's picture

Weekly ATM or near ATM covered calls in SPY, TLT, and GLD.  Very hard to fuck that up.  

Wed, 01/09/2013 - 12:48 | 3136808 buzzsaw99
buzzsaw99's picture

premature e-jack-lew-ation

Wed, 01/09/2013 - 12:28 | 3136710 Chuck Norris
Chuck Norris's picture

What's a reopening?

Wed, 01/09/2013 - 12:30 | 3136721 Cognitive Dissonance
Cognitive Dissonance's picture

It's when you have to reopen the septic tank and pump out the fetid fiat once again.

Wed, 01/09/2013 - 12:30 | 3136714 Dr. Engali
Dr. Engali's picture

Hey we have preemptive war, and soon to be pre-crime why not preemptive bond buying? We have to hit them before they hit us.

Wed, 01/09/2013 - 13:00 | 3136847 NotApplicable
NotApplicable's picture

You need some money tomorrow? Here, have it today for nothing! There's plenty to go around, after all.

Wed, 01/09/2013 - 12:29 | 3136716 Cognitive Dissonance
Cognitive Dissonance's picture

The Fed's just getting in ahead of the stampede to "quality". :)

Wed, 01/09/2013 - 12:31 | 3136725 Super Broccoli
Super Broccoli's picture

imagine if Ben wasn't there an those bonds would have to go thru a real auction :-)

Wed, 01/09/2013 - 13:02 | 3136855 Winston Churchill
Winston Churchill's picture

Two words.


Wed, 01/09/2013 - 12:31 | 3136727 youngman
youngman's picture

Market this..market that....what did the market say..there is no market anymore...and they will use the term a successful auction too...They have to keep those interest rates down so the big hedge funds can buy up all the housing supply....yeah thats it.....its just amazing what is going on in front of the curtain now.....and gold and silver down.....????????

Wed, 01/09/2013 - 12:57 | 3136829 Kaiser Sousa
Kaiser Sousa's picture

stay the Silver path bro...stay the path....


Wed, 01/09/2013 - 12:32 | 3136730 Dr. Engali
Dr. Engali's picture

The fed is front running itself. Hoping to make a little on the spread.

Wed, 01/09/2013 - 12:34 | 3136744 Cognitive Dissonance
Cognitive Dissonance's picture

Ok, now bend over and spread those cheeks just a little more.

<I ain't gonna kid ya Doc. This is really gonna hurt. Here, bite down on this.>

Wed, 01/09/2013 - 12:55 | 3136822 Dr. Engali
Dr. Engali's picture

The way the American public continues to be screwed that position has become an automatic reflex.

Wed, 01/09/2013 - 12:32 | 3136732 Everybodys All ...
Everybodys All American's picture

This will never last more than another 12 months. No doubt the wheels will come flying off at some point this year. Monetizing our debt on a World Reserve currency is going to piss off the wrong entity eventually.

Wed, 01/09/2013 - 12:37 | 3136758 Mad Mohel
Mad Mohel's picture

You are underestimating the Power of the Schwartz. Multiply your time estimate by 5-10 and you may closer to the mark. The Japs have been doing the same shit for the last 20 years, and the same shenanigans are still going.

Wed, 01/09/2013 - 12:39 | 3136766 buzzsaw99
buzzsaw99's picture

the schwartz is on my foot

Wed, 01/09/2013 - 12:42 | 3136779 Everybodys All ...
Everybodys All American's picture

The yen is not the world's reserve currency and therefore they do not export their inflation like we are doing. Over a trillion a year in printing is a heck of a lot of lies that end up in inflation.

Wed, 01/09/2013 - 16:30 | 3137980 Panafrican Funk...
Panafrican Funktron Robot's picture

You have to be willing to go to war against the U.S. and NATO if you want to challenge dollar hedgenomy.  

Wed, 01/09/2013 - 13:11 | 3136889 Winston Churchill
Winston Churchill's picture

The yen isn't the reserve currency.What they have done makes no difference.

When the rest rest of the world  starts starving  because of the inflation Zimbabwe Ben

exports to them on every print ,this is going to stop with massive bloodshed.

The Arab Spring had little to do with democracy,more the price of food.

Magnify that by 10 with the Russians ,and Chinese coming in as saviors.

There are quite a few country's with nukes, no US monopoly there.

Wed, 01/09/2013 - 12:44 | 3136786 disabledvet
disabledvet's picture

Hopefully the plane won't be airborne when it happens. I imagine "the Great Battle of Which Country Club is Better" is right around the corner.

Wed, 01/09/2013 - 12:33 | 3136737 Mine Is Bigger
Mine Is Bigger's picture

Next Up!

Pre-tax here we come!

Wed, 01/09/2013 - 12:46 | 3136801 disabledvet
disabledvet's picture

Already have that. They're called "estimated taxes" I believe.

Wed, 01/09/2013 - 16:31 | 3137989 Panafrican Funk...
Panafrican Funktron Robot's picture

Holy mother fuck do I hate estimated taxes.  

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