Thread: $456 Billion In Treasury Monetizations Since The Start QE Li

After $456 Billion In Treasury Monetizations Since The Start QE Lite, A Half-Time POMO Summary

by Tyler Durden
02/28/2011 13:34 -0500

Now that the Fed is by far the biggest institutional holder of US debt, it is time to conduct a periodic review of what, how and when Brian Sack has been monetizing in the past two years. As a reminder, as part of QE1, the Fed purchased $300 billion worth of Treasurys, the balance going to MBS and agency securities. QE Lite and 2 have, so far, focused only on USTs: as Morgan Stanley summarizes, as of today, the NY Fed has purchased a total of $456bn Treasuries / TIPS since August 10, or the announcement of QE Lite. Since additional LSAPs were announced in November (or QE 2 proper), the Fed has purchased $380bn. As the Fed is now roughly half completed with QE2, here is where we stand.

Graphically this looks as follows:



First, and most important for those who enjoy frontrunning the Fed which now telegraphs what it will do within 24 hours with impunity, here is the list of bonds most likely the be monetized by the Fed in future POMOs:



Next, we present the hit ratios, or the Submitted to Accepteds by Sector:



A more detailed visual chart of buybacks by sector and by operations:



Cumulative CUSIP purchases for the duration of QE Lite/2:



Last is the presentation of how many bonds are monetized on an On The Run basis, versus n-Old (aged vintages). Obviously PDs enjoy dumping any just issued 2, 3,5 and 7 years, while holding on recent issuance in the 10 and 30 Year space.



Source: Morgan Stanley

http://www.zerohedge.com/article/after- ... mo-summary

Primary Dealers Violently Expel Just Auctioned Off Three Year Bond, As Fed Monetizes Over Half PD Holdings In Under Two Weeks

by Tyler Durden
02/28/2011 11:35 -0500

Today's POMO closed with the Fed monetizing its usual fare of $6.69 billion in various 3 Year bonds, at a 5.81 Submitted-Accepted ratio. The surge in the S/A ratio is not surprising: a quick look at the internals shows just what the reason for the Primary Dealers' urgency was. Of the entire POMO, one CUSIP: the just auctioned off QH6 3 Year which was sold by the Treasury not even 2 weeks ago represented a whopping 81.1% of the operation. Observant readers will recall that this was the Cusip that was massively monetized ten days ago, when $5.3 billion of QH6 was purchased by the Fed. In other words, in under two weeks, the Primary Dealers have flipped over 50% of their original take down of the auction, or $19,890,840,000! In other words, had the Primary Dealers indicated their true interest in the bond, not accounting for expectations of an immediate flip back to the Fed, the auction would have been a failure. In this way, the Fed has now monetized 33.5% of the 3 Year that was sold to the unwitting public and foreign banks. Luckily, there is a 35% SOMA limit on Treasury holdings. Oh wait, that was scrapped as part of QE2.

Today's POMO summary: note the highlighted QH6 monetization.



And compare it to that from the last 3 Year POMO as of February 18:

Friday Episode Of Criminal Reserve's "Flip That Bond" Accompanies Dollar Plunge

by Tyler Durden
02/18/2011 12:14 -0500

Meanwhile, not letting any parabolic blow off in silver crisis go to waste, the Criminal Reserve and the Criminal Dealers engaged in another gang rape of whatever is left of the US middle class. Today's POMO, which closed with $6.688 billion of 3 year bonds getting monetized (at a whopping 5.6x Submitted/Accepted ratio), basically consisted of just two cusips: the 912828PQ7 and the 912828QH6. Of these two, QH6 represented $5.285 billion or 80% of the entire POMO. Why is this interesting? Because this CUSIP was auctioned off ten days ago, with an actual issuance date of February 15. That's Tuesday. The Fed just monetized bonds that were eligible for trading for a whopping 3 days! The daylight robbery, and the PD fringe benefits, continue as nobody apparently has the guts or half the brain to understand just how criminal this set up is. Luckily, everyone will magically, and very retroactively "know" just how ominous this now daily occurrence was after the next and last crash.



And compare it to that from the last 3 Year POMO as of February 18:



And for those US taxpayers who are somehow not zombified yet with their iPad apps and praying to find enough credit money for that 3rd liposuction, here is what now glaringly direct monetization does to the US currency.



http://www.zerohedge.com/article/primar ... half-pd-ho