Fed Cuts May POMO To Only $24 Billion From $30 Billion

One hour after announcing that the Fed would, as expected, cut its monthly Treasury purchases, aka stock market liquidity injections to $25 billion (and $20 billion in MBS), the NY Fed released its POMO schedule for the month of May. The key highlights:

  • "The Desk plans to purchase approximately $24 billion in Treasury securities over the month of May. This amount is approximately $1 billion less than the stated pace of $25 billion per month, given that purchases conducted in April exceeded the target by approximately $1 billion."
  • There will be "only" 16 POMO days, down from the usual 18.
  • The largest POMO days will be Monday May 12, when the Fed will inject $2.25-$3.0 billion into the market and Thursday, May 29, when another $2.50-$3.25 billion will be allocated to stocks.
  • There will be no POMO on Wednesday May 7, Thursday May 15, and Wednesday May 26. Needless to say, for those so inclined, these may be the better shorting entry points.

At this pace POMO will be over by December, although expect the market to enter full freakout mode when the Fed is only monetizing a paltry $10-15 billion on about half the days of the month.