The Fed’s new Taffy facility is nothing more than an extension of its recent con game. The Fed will reduce the usual liquidity injections via open market operations (OMO) to accommodate whatever goes into the system via the Taffy route. Why do I suspect this? Because today, on the next to last Thursday before Christmas, the Fed did not add a single dime to the market. And they are now running way behind last years pace of liquidity injections for this period.
BULLETIN – This just in. The Fed announced that it will redeem $15 billion of its expiring 4 week T bills next Thursday. That, and today’s $5 billion redemption, covers the $20 billion Taffy pull next week. NO NET LIQUIDITY IS BEING ADDED TO THE SYSTEM.
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“NO NET LIQUIDITY IS BEING ADDED TO THE SYSTEM.” … agreed, if it were not for this strangle of cash and cash equivalents action the FED is continuing the dollar really would come under pressure, interesting note that “The Federal Open Market Committee has authorized temporary reciprocal currency arrangements (swap lines) with the European Central Bank (ECB) and the Swiss National Bank (SNB).”
Wow. The Canadian ABCP information was startling. I know you and others have talked about it before, but “orders of magnitude larger than what is being reported”?? Thats a little scary.
Also, I try to follow this and I didn’t realize that tomorrow was such a key date.
It will be interesting to see what happens…