Market Liquidity Shortage Will End On March 1 – Professional Edition

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The composite liquidity indicator barely budged last week, as the Fed’s mid month settlement of its monthly forward MBS purchases was largely offset by the fact that most of the cash sat in reserves at the Fed while other measures marked time or pulled back slightly. Two large cash management bills (CMBs) issued by the Treasury over the past two weeks offset the effects of the February mid month surge of Fed liquidity causing a temporary shortage of cash for the markets. The repayment of $63 billion in ECB LTRO loans exacerbated the situation. Barring a reduction in QE, this was one of the few weeks that we will see this year where there’s not enough Fed QE money to absorb new Treasury supply and other negative impacts.

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Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor for 16 years and also work with David Stockman on his website, which I developed, and for which I continue to provide analysis and charts. I’ve had a wide variety of jobs, mostly related to finance for the past 40 years including a stint on Wall Street in both analytical capacities and sales. Prior to starting the Wall Street Examiner I worked as a commercial real estate appraiser in Florida for 15 years. I also worked in the residential mortgage and real estate businesses when I was young. I have been charting stocks and markets, and doing analytical work of various kinds, since I was a teenager. My perspective is not of the Ivory Tower. It is instead from the perspective of having my boots on the ground and in the trenches of the industries that I analyze and write about today.