Fed Cuts Pace Of Treasury QE To Just $8 Billion Per Day

From an initial $75 billion per day when the Fed announced the launch of Unlimited QE in March, the US central bank first reduced its daily buying to $60 billion per day, then  four weeks ago announced another 'taper' in its bond-buying program to $50 billion per day, which was followed by a reduction to 30 billion per day, which was then  again cut in half to $15 billion per day. Then, last week the Fed again slashed its daily POMO by another 33%, to $10BN per day, and now in its latest schedule, the Fed unveiled that in the coming week it would purchase "only" $8BN per day.

Contrary to some expectations that the Fed would only announce a month POMO total, the Fed continued the practice of providing a weekly preview of its purchasing operations, which in the coming week will amount to $40BN in TSYs.

Here is the full schedule of Treasury purchases for the week ahead. Note the increasing divergence between some days of the week, such as the $4.5BN in POMO on Monday vs the $13BN on Tuesday.

Additionally, the Fed will also taper its MBS buying from $8 billion to $6 billion on average in MBS per day next week:

  • Mon: $6.16Bn from $8.213BN last Monday
  • Tue: $5.76BN from $7.68BN last Tuesday
  • Wed: $6.16BN from $8.213BN last Wednesday
  • Thur: $5.76BN from $7.68BN last Thursday
  • Fri: $6.16 from $8.213BN last Friday

The chart below summarizes all the Fed Treasury and MBS buying completed and scheduled since the relaunch of QE on March 13:

So, in aggregate, the Fed will buy a total of $70 billion of MBS/TSYs next week, down from $90 billion but still vastly more on a weekly basis than the largest QE programs monthly totals before this crisis, if well below the $625 billion in purchases conducted in the week starting March 23, when the financial system was once again on the verge of collapse and only the Fed could bail it out... just don't call it a bail out because nobody could have possibly anticipated an economic shock especially after banks repurchased trillions in their own stock in the past decade.

Meanwhile, as we showed last night, as of April 29, the Fed's balance sheet was a satanically record $6.66 trillion, up $82.8 billion on the week and up $2.5 trillion from a year ago. Just staggering numbers and unprecedented attempts at dollar debasement, which however remains stubbornly strong as a result of the ongoing $12 trillion global US dollar short squeeze.

Finally, for those curious what the "helicopter money" big picture looks like, now that the Fed and Treasury are merged with the Fed stuck monetizing Treasury issuance indefinitely, here it is: as we reported last week when the Fed did QE in the years following the 2008 financial crisis monthly Treasury purchases never exceeded US Treasury net issuance, but the Fed is now on track to buy double the amount of net issuance.