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Presenting The Maturity Change Of The Fed's SOMA Treasury Holdings
Wonder why the Fed's DV 01 is about to surpass $2 billion in a few short months? Because the downward sloping line below, which shows the average maturity of Fed holdings, is about to go up, up, up. And yes, that means that every 0.01% change in interest rates will mean a $2 billion capital loss for the Fed. But, oh yes, the Fed can always print money so no risk there...
Source: Stone Mountain
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Forget all this FED nonsense about this fake economy.
This is the real news of the day:
R.E.M. have decided to call it a day:
www.remhq.com
I hate that band... almost as much as I hate Bob Dylan.
That's funny. Almost everyone I've ever known who claimed to "hate" Bob Dylan actually loved about 20 different of his songs covered by other bands that they had no clue he wrote. I think what you mean to say is you "hate Bob Dylan's voice". That I could understand.
revoke the fed licence!
http://covert3.wordpress.com
It is the end of the world as we know it, Benocide confirmed it today
Lets bankrupt the FED.
Ouch. Boxing themselves into a corner no?
Unfortunately, you presume far too much of me Tyler...
The DV01 of an asset or portfolio describes the change in value of the asset/portfolio given a one unit change in the yield or spread of the security/portfolio.
Delta Value of a 1 basis point change.
Do you know if it is a 1bp drop in interest rates which would decrease the value of their toxic MBS
or
a 1bp rise in interest rates which would decrease the value of their sovereign paper?
Yeah, I just looked up "DV01" and had to be resuscitated with smelling salts...
I do enjoy these technical articles...just make sure you always tell us whether it's good or bad news in the summary, because I would have been clueless on this one.
So basically, this DV01 interest rate risk, combined with suspected mass selling of treasury put options by the Federal Reserve, means that the Fed can never allow interest rates to rise, ever?
...from the hole, the trumpeting of The Truth brings forth Chairsatan's hand upon the ear and the fruit of history calls out from the tree and anounces the prophetic fulfillment to come again ...even unto zero hour. http://www.youtube.com/watch?v=akAj-TWUq0E
http://www.youtube.com/watch?v=D6raFS_dxns&feature=results_main&playnext=1&list=PL18EAFFC668F0E9AD
Do you have the %'s
As i said , things get interesting when the fed experiences capital losses...
Perhaps you missed the part about the Fed actually owning the printing presses.
They can lose all they want - just make more. When your're officially the lender of last resort - you simply don't run out of money, no matter what happens.
This is when you start having real dollar weakness... all the action until now is merely appetizer...
And it's gonna be hilarious when the US treasury yields go to 150% like Greece uh?
When the private institution of the FED goes under, maybe the sheeple will wake up and see that the FED was private all along...
Is this how the fed loses control of the balance sheet - every .01% equals 2 billion.
I was going to ask why we care if central banks take losses on holdings because they can just recapitalize themselves.
Hey, there all college graduates with degrees and shit right? They know what their doing right?
To the printmobile!
This is such a huge issue, that (other than various ZH comments) no one discusses.
Yes, we have fiat currency. But it is, in theory, backed by Federal Reserve balance sheet (or maybe it's just backed by Federal Reserve BS). If not, then there is no point in having the balance sheet.
It seems to me this increase in duration has significant risk for the value of the dollar. But I have never, no once, heard that additional risk discussed on TV or print.
Not only that, but assuming the Fed cares about the value of the balance sheet, it also will tie their hands in fighting inflation in the future. How can they increase interest rates knowing it will cause substantial balance sheet loss?
Bernanke may not be able to stop inflation in 15 minutes after all....
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