As Of This Moment Ben Bernanke Own 30.5% Of The US Treasury Market... And Will Own All By 2018

Tyler Durden's picture

As is well-known by everyone, the Fed monetizes the US deficit on a daily basis, thanks to the 45 minutes of POMO love each day when it buys Treasuries from Dealers. Of course, the Fed monetizes bonds from across the entire curve (mostly the longer end), which is why it is somewhat complicated to express the amount of risk transfer the Fed takes on every time the S&P posts an uptick as a result of yet another bond purchase by the hedge fund with the largest fixed income portfolio in the history of the world. However, one simple way of expressing just this risk is through the use of ten year equivalents: Ten-year equivalents are the amount of 10-year notes that must be held by the Fed in order to remove the same amount of interest rate risk from the market as its current holdings. What this methodology allows is to represent the Fed's holdings of all marketable securities on a linear continuum, and represent the remainder, or those bonds held by the private sector, on the side.

So what may come as a surprise to most, is that as of this week's H.4.1 update, the amount of ten-year equivalents held by the Fed increased to $1.583 trillion from $1.576 trillion in the prior week, which reduces the amount available to the private sector to $3.637 trillion from $3.668 trillion in the prior week. And also, thanks to maturities, and purchase by the Fed from the secondary market, there were $5.219 trillion ten-year equivalents outstanding, down from $5.244 trillion in the prior week.

What this means simply is that as of this moment, the Fed has, in its possession, a record 30.32% of all outstanding ten year equivalents, or said in plain English: duration-adjusted government bonds. It also means that the amount of bonds left in the hands of the private sector has dropped to a record low 69.68% from 69.95% in the prior week.

America may or may not be becoming increasingly socialist and/or nationalized, but there is no doubt about it: its bond market most certainly is.

Chart of total ten year equivalents, broken down by Private sector and the Fed (courtesy of StoneMcCarthy):

The percentage of the entire US bond market currently owned by the Fed (courtesy of StoneMcCarthy):


Finally, the above means that with every passing week, the Fed's creeping takeover of the US bond market absorbs just under 0.3% of all TSY bonds outstanding: a pace which means the Fed will own 45% of all in 2014, 60% in 2015, 75% in 2016 and 90% or so by the end of 2017 (and ifthe US budget deficit is indeed contracting, these targets will be hit far sooner).

By the end of 2018 there would be no privately held US treasury paper.

Still think QE can go on for ever?

Actually, nevermind.  

P.S. as a bonus, here is a breakdown of the Fed's SOMA holdings by CUSIP

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nmewn's picture

Good, we'll know who to prosecute.

HulkHogan's picture

 "... a pace which means the Fed will own

45% of all in 2014,

60% in 2015,

75% in 2016 and

90% or so by the end of 2017." 

Zer0head's picture

Oh Canada and Toronto

The Rob Ford Crackpipe Truthers have mobilized. And they're sending me this link as proof of the conspiracy ....


(odd, is it not that the term "truthers" has become a pejorative?)

knukles's picture

100% by when?
Nope, not a chance.
If Benji and the Inkjets get anywhere close to owning much more, yields will drop so bloody low that idiots like the Krugster will be cumming in thier pants telling everybody how great the deficit situation is relieving the gubamint of the responsibility to even slow expenditures... thereby facilitating Infinite Creation of Treasury Securities to Create Digital Coin of the Realm.

No, it will not end that cleanly or easily, FFS

Manthong's picture

I found this intriguing… it seems to present  some interesting levels of meaning..

Copper oxidizes a bit but does not rust.

idea_hamster's picture

In that last chart, why does the years-to-maturity axis roll back from 29.3 to 12.7 at the far end?

max2205's picture

Who cares, what does it mater at this time...Hillary

disabledvet's picture

you're gonna get burned Tylers Durden. Knuckles is spot on on this. tax revenue is gonna come in big...we'll see about Obamacare but my view is that it's already been pretty much gutted to "make way for the annihilation of all other health care choices."

merizobeach's picture

"if the US budget deficit is indeed contracting"

I'm sorry, but you lost me there.  Over what medium- or long-term has that ever happened?  Since the beginning of Reagan's administration, with the exception of a couple years at the end of Clinton's, the budget deficit has achieved a new plateau with every four year term.  If Obama's second term does somehow bring a decline in average annual budget deficits from the first term, it would be an historical abberation, though I concede the possibility, as the average $1.5Tn deficits of the first term were also an abberation for their pace of increase over previous four years.  Still, I don't yet see any evidence to support the thesis that deficit spending will not, over the long-term, continue to progressively increase until its unsustainability results in collapse, not tapering, or any other such political measures of 'salvation'.  We're on Dr. Suess' Green Eggs and Ham train, and you can skip to the end of the book to see what happens to that train.

eclectic syncretist's picture

The Fed monetizing bonds is a form of debt forgiveness to the Government, just like the Fed buying $40,000,000,000 in MBS every month is a form of debt forgiveness to the banks. 

Why do they exclusively get their debt forgiven, especially since they created the mess that has supposedly necessitated it?  It's because they are more equal than the rest of us, according to the Konstitution.

James_Cole's picture

" thereby facilitating Infinite Creation of Treasury Securities to Create Digital Coin of the Realm"

As long as the US military reigns supreme this doesn't seem to matter much, it'll just be a more extreme form of .gov as the pretenses have to dispensed with.

disabledvet's picture

oh and phucking with Special Operations Command past, present and future is not a wise health care option either.

asteroids's picture

If everyone (wake up china) dumps their US paper the chairsatan would be forced to print up trillions to buy it. That would be fun!

daveO's picture

If their economy turns south, they'll dump Treausuries long before gold.

FreedomGuy's picture

So is the Fed the buyer of last resort or first resort, now?

At what percentage of debt do we remove the veil and just have the Chairman replace the President?

Skateboarder's picture

That fool's flight ticket outta here has been GUA-RANT-EED, I'll tell ya that much.

nmewn's picture

I have no doubt, along with his enablers.

But...the mortgages would be ripped can be changed very easily, with the proper cattle

Thats the only thing holding the mask up...the law.

Charles Nelson Reilly's picture

The carpet-pissers did this?

azzhatter's picture

yeah, well that's like your opinion man

SRSrocco's picture

You wonder just how long this INSANTIY can go on.  The last time I checked the TIC data, foreigners are still adding a bit to their Treasuries holdings.  They are almost forced to do it to keep their currencies from rising too much against the Dollar.

Anyhow, I posted this before, but I wanted to provide a link again for those who did not read...


The gold and silver miners are the REAL MONEY CREATORS in the world, not the parasite banks on Wall Street.

francis_sawyer's picture

Oh... I thought it was the 'bitcoin' miners


Doze dudes ah 'Wickit Smaht'...

Stuck on Zero's picture

This is cool.  When the Fed owns 100% of the government debt we dissolve the Fed and everything is taken care of. No more debt.  Problem over.


AndrewJackson's picture

Duration adjusted 10 year equivalents? Please Tylers. It really is amazing the hedonics this site will come up with just to satisfy a bearish viewpoint on the world.




Spitzer's picture


Keep buying those treasuries ...


Chupacabra-322's picture

Of course they will. And, they will re invest them the the Criminal Fraud Derivatives markets.

q99x2's picture

There was no greater fool than Ben Bernanke during the decline of the UN empire.

Legolas's picture

Why wait until 2018?  What's to stop them from accelerating the spending?

Cdad's picture

Bond "market"....LOL!

kliguy38's picture

I also would want yur sturdy blond women 

knukles's picture

And all the Ativan and Marinol that I can carry during the Supermarket and Pharmacy Sweep
Fine honey, go get the diet ice cream and laundry soap, I'm gonna look for some more Vicodin....  Hmmm, I wonder where he kept the Quaaludes?

its after 420 or 714 somewhere....

nmewn's picture

Dats sexist!!!

Tyler!!! ;-)

///////////// sense of humor.

StarTedStackin''s picture

I'm almost embarrassed to say that I hold Treasuries......but I have 40K in a 401b or 527a or somesuch nonsense through Fidelity.....I can't bail on them till I sign my retirement papers.....



Looking just to cash right out and pay the tax that I deferred.

Mrs. Haggy's picture

I don't think you can.  I'm in the same boat and would like to get out as well.  The only way I can cash out is if I have some sort of "life changing event".  It makes me wonder what percentage of the market is just a hostage like us.  What might happen if we were allowed to get out? 

Smegley Wanxalot's picture

Someone buys this shit?

Buck Johnson's picture

Actually less and less people are buying this junk, the reason for the Fed to buy back it's debt. 

AccreditedEYE's picture

By the end of 2018 there would be no privately held US treasury paper.

Whew!!! Thank God it's only 2013..... :)

Cognitive Dissonance's picture

Tyler, can the Fed also purchase those special issue Treasuries that are held exclusively by the Social Security "Trust" fund?

Debt-Is-Not-Money's picture

We should encourage them to buy it all.

After that happens the FED should be shut down and all the sovereign debts cancelled as they were created with non-existent "money" using the fraud of "fractional Reserve banking".

Then, the banksters responsible form creating and promulgating this fraud must be arrested, tried, convicted and hanged!


Skateboarder's picture

Say hi to some sort of permission-granting national ID card, for starters.

EDIT: Ooh, ooh, with digital banking built in.

IamtheREALmario's picture

And we will call it ... "Bitcoin".

Go Tribe's picture

So the banks will own the U.S. government in 2018. Don't they already own it?

Dr. Engali's picture

So we have to wait until 2018 to shut down he fed? Damn I was hoping it would implode this year.

Angus McHugepenis's picture

I have just taken complete ownership and control of the entire Cowbell industry. Even Bercracky will still need moar cowbell!

SWCroaker's picture

Well crap.  If they own everything, does that mean we can all get jobs?   They'll be like, hiring, right?

Downtoolong's picture

I think the point is that 100% ownership of the Treasury market by the Fed is entirely inconsistent with the dollar maintaining it's reserve currency status. You can't have both, which is why something very big has to break long before we even get there. At the current pace we're going there the long enough time line isn't very long.


Charles Nelson Reilly's picture

I wouldn't really worry too much about this, the fed knows what they're doing.

99% of hedge fund & money managers

sumo's picture

After all, the Fed is full of Piled Higher & Deeper economists. What could go wrong?