The Fed again stood its ground on Tuesday doing a minimal net add of $250 million. They added $7.5 billion in overnight repos, against $7.25 billion in expiring repos. This is unlike last year when the Fed pumped hard right up to the end of the year, but it’s similar to 2004 when they pulled back a little in late November before another push in mid to late December. Meanwhile, the Treasury is running out of cash. They announced a $29 billion Cash Management Bill auction to be held tomorrow, to raise enough cash to hold them until tax receipts come in on 12/15. This is in addition to $11 billion in new cash being raised in the two and five year note auctions. $11 billion in CMBs maturing on Friday will help somewhat, but next week’s auctions will ask for yet more cash. Click here to download complete report in pdf format (Professional Edition Subscribers).
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