Just when you thought the Fed was trying to gradually disintermediate itself from capital markets, they are off to the races with another POMO action. As of this auction, $276.3 of the $300 billion in Treasury repurchase allocation has been used up, leaving less then $25 billion for future POMO actions. As Zero Hedge discussed before, this total will be used up in the next 2 weeks. What then? All of a sudden the invisible bid under equities is looking very, very precarious.
Notably, of today's POMO, $317 million was used to purchase CUSIP KX7, which is the 3-Year that was auctioned off on June 9, 2009. The bulk of activity ($5.1 billion) was focused on CUSIP LH1.
And here is a graphic representation to either D-Day for equities or to QE 2.0