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For The First Time In History, Fed Will Buy AND Sell Treasurys At The Same Time On Friday

Tyler Durden's picture




 

Following today's unprecedented POMO failure due to "system difficulties" (one would hope the Fed's POMO machine does not start and stop every time someone pulls the plug from the socket), Brian Sack's team (not to be confused with the PWG team of Eric Mindich) had to reschedule the literally failed auction. As it turns out, the first opportunity to sell $8-$8.75 billion in 2013 bonds is on December 2. And unlike the December 21 "reverse" POMO which is due to take place at 1:15pm, the rescheduled bond sale will instead occur at its usual time of 10:15-11:00am. Ironically, this is also the time when the Fed will be buying $2.25-$2.75 billion in 2036-2041 bonds. In other words, for the first time ever on Friday the Fed will be literally selling and buying bonds (although selling 4 times more than buying) at the same time. If this is not the pinnacle of deranged monetary policy which does not even attempt to offset monetization by a few hours, then nothing ever can be.

Source: NY Fed

 

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Wed, 11/30/2011 - 16:22 | 1932031 gangland
gangland's picture

market makers the price stability

Wed, 11/30/2011 - 16:23 | 1932050 Peter_Griffin
Peter_Griffin's picture

market makers breakers

Wed, 11/30/2011 - 16:28 | 1932083 UGrev
UGrev's picture

A box of markets, 

A box of mixed markets 

and a market mixer.

Five time fast.. GO!

Wed, 11/30/2011 - 16:39 | 1932140 Pool Shark
Pool Shark's picture

 

 

Given that TPTB believe we need to spend more to get out of debt; this comes as no surprise.

 "We had to destroy the dollar in order to save it..."

 

 

Wed, 11/30/2011 - 16:43 | 1932167 Nobody special
Nobody special's picture

Think critically about this.  It does make sense.  Nations do not want their 30 year treasuries, so if they agree to buy lots of short term debt, the US will buy a little of their long term back.  It's a means of leveraging the fear of long term debt devaluation.  Hardly a positive situation.

Wed, 11/30/2011 - 16:49 | 1932201 Darth..Putter
Darth..Putter's picture

Wait, wait....I thought that this is what they've been doing for four years.

Wed, 11/30/2011 - 17:49 | 1932634 max2205
max2205's picture

Twist and scream... I mean Shout. Ben is like a retard with a Bazzoka

Wed, 11/30/2011 - 18:23 | 1932804 SHEEPFUKKER
SHEEPFUKKER's picture

You mean, oral and anal sodomy at the same time? Brilliant. 

Wed, 11/30/2011 - 20:39 | 1933254 Tijuana Donkey Show
Tijuana Donkey Show's picture

anal sodomy? Isn't that redundant phrasing? Like military waste, or congressional pork? I think that sodomy, military, and congress imply the second word.

Thu, 12/01/2011 - 00:08 | 1933838 GMadScientist
GMadScientist's picture

Anal pork waste. AKA Santorum.

Wed, 11/30/2011 - 16:30 | 1932094 TruthInSunshine
TruthInSunshine's picture

Bernank broke the markets.

Pretty soon, we'll learn of an art or livestock auction that The Bernank attended while on vacation, in an attempt to have some R&R, whereby The Bernank outbid himself on every item sold, only to be arrested at auction end after failing to have enough fiatski to pay the tab, as he forget he didn't have access to his Staples Easy Printing Button.

Wed, 11/30/2011 - 16:36 | 1932128 LawsofPhysics
LawsofPhysics's picture

Exactly.  To think that the cost of real goods and serices isn't going to explode upwards as commodities go higher is simply insane.  Margins matter in the real world, unless of course you have direct access to the Fed's printing press and the taxpayer's wallet.

Wed, 11/30/2011 - 16:42 | 1932139 GeneMarchbanks
GeneMarchbanks's picture

'Bernank broke the markets.'

Nah-uh. That, my friend, is crazy talk. Even if it were true, I'm sure we'll see Sack and Mindich here to fix real soon.

Wed, 11/30/2011 - 16:43 | 1932166 NotApplicable
NotApplicable's picture

He wasn't even born then.

Wed, 11/30/2011 - 17:29 | 1932299 Vincent Vega
Vincent Vega's picture

Ponzi n. - A fraudulent investment scheme in which funds paid in by later investors are used to pay artifically high returns to the original investors, thus attracting more funds. 

 

 

Wed, 11/30/2011 - 16:22 | 1932038 undercover brother
undercover brother's picture

spread the wealth, keep those primary dealers happy.  well done

Wed, 11/30/2011 - 16:45 | 1932043 hedgeless_horseman
hedgeless_horseman's picture

 

 

I doubt that this will be the first time Bernanke is Lucky Pierre, both giving and receiving at the same time.

http://www.urbandictionary.com/define.php?term=lucky+pierre

 

Wed, 11/30/2011 - 16:22 | 1932045 RobotTrader
RobotTrader's picture

I'm calling this the "ServPro" market.

"Like it Never Happened"

So many U-turns, reversals, etc.

Wed, 11/30/2011 - 16:26 | 1932067 GOSPLAN HERO
GOSPLAN HERO's picture

Your mother is looking for you.

She has a paddle in her hand.

 

Wed, 11/30/2011 - 16:33 | 1932088 LawsofPhysics
LawsofPhysics's picture

If that's robo in the picture, I am looking for her, with several devices in hand.  Seriously though robo, what is today's advice from captain hindsight?  Lighten up people.

Wed, 11/30/2011 - 17:17 | 1932392 Spastica Rex
Spastica Rex's picture

It's not real.

Thu, 12/01/2011 - 00:09 | 1933843 GMadScientist
GMadScientist's picture

You're like those birds that brain themselves flying into plate glass windows.

 

Wed, 11/30/2011 - 16:29 | 1932097 sabra1
sabra1's picture

and a canoe in the other!

Wed, 11/30/2011 - 17:01 | 1932285 GrinandBearit
GrinandBearit's picture

Nah, she knows exactly where he is... he's in his mommies basement.

Wed, 11/30/2011 - 17:50 | 1932643 Robot Trader's ...
Robot Trader's brother's picture

Mom knows he hides in the attic with his computer.

My brother craves the troll attention.

Just ignore him....

Wed, 11/30/2011 - 16:29 | 1932090 UGrev
UGrev's picture

You make me look smart when talking about the markets.. and that's not saying much for you :)

Wed, 11/30/2011 - 16:35 | 1932047 firstdivision
firstdivision's picture

What a perfect way to prevent the market jubilee from crashing into reality.  Could you imagine what would have happened with the fed sucking $8B out of banks coffers today (and that is without leverage).

Time to short this shit show of a market.  I cannot wait til it figures out that Europe is still insolvent, there's $100T new outstanding derivative contracts than last year, and that the China bubble has begun deflating.

Wed, 11/30/2011 - 16:24 | 1932057 fuu
fuu's picture

We call him cumulonimbus because he makes it rain.

Wed, 11/30/2011 - 16:24 | 1932060 GolfHatesMe
GolfHatesMe's picture

Hopefully RBS buys them all. 

Wed, 11/30/2011 - 16:24 | 1932063 GeneMarchbanks
GeneMarchbanks's picture

The most deranged monetary policy... so far.

Wed, 11/30/2011 - 16:26 | 1932069 Everybodys All ...
Everybodys All American's picture

At some point wouldn't it just be easier to just 'lose' the Treasuries. The joke is pretty much known to all is it not?

Wed, 11/30/2011 - 16:36 | 1932127 IBelieveInMagic
IBelieveInMagic's picture

Who is to say it is not happening already? Debt to fund consumption and entitlement payments can never be paid back -- all this 3 card Monti shuffling is just to fool the rest of the world that is supplying real stuff in exchange for paper and electronic bits. Fed is the portal thru which non-performing paper go to heaven! 

Wed, 11/30/2011 - 16:26 | 1932072 semperfi
semperfi's picture

So does this mean that they are buying what they are selling?  ;P

Wed, 11/30/2011 - 16:38 | 1932145 El Viejo
El Viejo's picture

Ha! Maybe they are putting our money where their mouth is.

Wed, 11/30/2011 - 16:26 | 1932074 Hansel
Hansel's picture

Dude is churning his portfolio.  Economists suck at trading.

Wed, 11/30/2011 - 18:11 | 1932747 whatsinaname
whatsinaname's picture

can I givve Hansel the green arrow a thousand times ?

+1000

Wed, 11/30/2011 - 16:27 | 1932077 LawsofPhysics
LawsofPhysics's picture

All fine and good until real demand has to be met and the suppliers ask for more and more paper (asking for anything else apparently gets you the attention of NATO's "freedom" force).

Wed, 11/30/2011 - 16:28 | 1932086 HD
HD's picture

I hope the perma bulls enjoyed this today - Fed isn't just out of bullets - it threw away the gun.

Wed, 11/30/2011 - 16:30 | 1932100 LawsofPhysics
LawsofPhysics's picture

Yep, but for no it is irrelevant as they have complete control over the "1's" and "0's" that the add and subtract.  Just wait until the system becomes self aware, then shit gets real.

Wed, 11/30/2011 - 16:34 | 1932113 sabra1
sabra1's picture

when the bulls accounts are busting at the seams, that's when the fed pulls a MF Global!

Thu, 12/01/2011 - 00:11 | 1933848 GMadScientist
GMadScientist's picture

They loaded the bullets and then threw the gun.

Wed, 11/30/2011 - 16:29 | 1932095 Joe Sixpack
Joe Sixpack's picture

Trading long term debt for short term. No confidence in the future.

Wed, 11/30/2011 - 16:31 | 1932105 sabra1
sabra1's picture

i'm gonna wait for gold to drop, so i could sell it back to myself for a better price!

Wed, 11/30/2011 - 16:43 | 1932169 s2man
s2man's picture

OMG, you could make a fortune doing that!

Wed, 11/30/2011 - 16:49 | 1932202 adr
adr's picture

I'm going to buy a car and claim that in 60 years it will be worth $10 million and sell it today for $10 million and then use that money to buy 100 more cars that I say will be worth $10 million each alowing me to become a billionare overnight. Isn't that exactly the kind of math the FED ad the banks are using right now?

Thu, 12/01/2011 - 00:13 | 1933853 GMadScientist
GMadScientist's picture

I'm gonna short PMs...and then become a successful alchemist.

Wed, 11/30/2011 - 16:34 | 1932112 MFL8240
MFL8240's picture

Markets are not made on printed money, they are made on Growth and REAL profits (not accounting gimmicks).  This is all just trading and trading on the news of the day. I would stay out. 

Wed, 11/30/2011 - 16:36 | 1932129 firstdivision
firstdivision's picture

I know one guy that would disagree with you.  (hint: his initals are BB)

Wed, 11/30/2011 - 16:37 | 1932136 Sandy15
Sandy15's picture

going to sell out of positions and pull ALL money out of accounts.  Went to the bank yesterday, they would only allow me to withdrawl $1000 per day........BUT I bet if I take $10,000 to deposit they wouldn't turn me away saying I can only deposit $1000 per day........  it has started with them controlling our money supply to us.

Wed, 11/30/2011 - 16:40 | 1932149 LawsofPhysics
LawsofPhysics's picture

What bank?

Wed, 11/30/2011 - 16:35 | 1932118 Sandy15
Sandy15's picture

So are they going to buy the bonds that they are selling.........CRAZY CRAP!!!!!!!

Wed, 11/30/2011 - 16:39 | 1932148 LawsofPhysics
LawsofPhysics's picture

Yep, thus allowing the primary dealers and paper-pushing financial fucknuts to collect their fees and bonuses - stealing wealth while adding no real value.

Fuck them, the sooner the system crashes, the sooner compensation (in whatever form that may be) returns to people who are actually worth a shit.

Wed, 11/30/2011 - 16:35 | 1932120 Thorny Xi
Thorny Xi's picture

"I didn't know it was biologically possible to suck and blow at the same time."  Bart Simpson

Wed, 11/30/2011 - 16:36 | 1932132 hambone
hambone's picture

This is like the banker in Monopoly grabbing sticky notes and writing any amount on 'em and floating them...and doing it right in front of you...if you don't get it now, you are willfully blind.

Wed, 11/30/2011 - 16:38 | 1932137 b_thunder
b_thunder's picture

"...the Fed will be literally selling and buying bonds (although selling 4 times more than buying) at the same time. If this is not the pinnacle of deranged monetary policy.."  

Why is it so surprising?  Don't you know the Fed's official motto-  Buy HIGH, sell LOW! 

Also, this is the easiest way to let day-traders earn a few million dollars withot them taking on the risk of carrying positions overnight (when who knows whioch country/bank/MoFo Global will file Chapter 11)

And lets not forget those fees and commissions on the round-trip trade - double the commish, double the fun (later that evening, at the strip joint)

 

 

 

 

Wed, 11/30/2011 - 16:38 | 1932138 the not so migh...
the not so mighty maximiza's picture

they are bopping their own baloney on friday

Wed, 11/30/2011 - 16:44 | 1932175 adr
adr's picture

WTF seriously? How do you get a maturity range of 5 years on a bond? So the Fed is selling bonds that mature in two to three years and buying the long dated bonds at the same time. When d they sell back the long dated bonds they bought? The past two days have made my head explode. My brain can't take any more stupid. Maybe I'll turn on Cramer so  can end it all.

Wed, 11/30/2011 - 16:45 | 1932181 pmcgoohan
pmcgoohan's picture

Its the Arb of the century

Wed, 11/30/2011 - 16:47 | 1932193 Fazzie
Fazzie's picture

 This must only make sense to a Princeton PHD. And why the hell bother with a few bill of sales when you have just essentially took Europe on your balance sheet?

Wed, 11/30/2011 - 16:50 | 1932215 NotApplicable
NotApplicable's picture

Bennie's going looooooong maturity. (as if the Treasury had any)

Wed, 11/30/2011 - 16:52 | 1932230 Dr. Gonzo
Dr. Gonzo's picture

Wonder what it would be like to live in a time of a true gold standard. Bet it was awesome.

Wed, 11/30/2011 - 17:07 | 1932321 Honey Badger
Honey Badger's picture

As disgusting as eating and puking at the same time. 

Wed, 11/30/2011 - 17:12 | 1932344 Atomizer
Atomizer's picture

Friday's Circus Act

Uncle Ben: Ladies & Gentleman, I am placing the pea under the shell.. quickly shuffles the shells around. Which shell is the pea under?

Wed, 11/30/2011 - 17:14 | 1932365 Elwood P Suggins
Elwood P Suggins's picture

On Friday Ben Bernanke will shit and wind his watch at the same time.

Wed, 11/30/2011 - 17:57 | 1932679 Bastiat
Bastiat's picture

Buying down the long end of the curve to keep mortgage rates down and allow some more Muni refundings.

Wed, 11/30/2011 - 18:00 | 1932697 Black Friday
Black Friday's picture

Monetary masturbation at its finest :p

Wed, 11/30/2011 - 18:49 | 1932918 YesWeKahn
YesWeKahn's picture

They are different from the criminals on the street, they tell you what they do to robe you and kill you.

Wed, 11/30/2011 - 19:17 | 1933018 lemonobrien
lemonobrien's picture

masturbation at its finest.

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