The Fed threw more fuel on the fire with a net add of $8.25 billion as the Treasury continued a second day of massive paydowns with $32 billion in net payoffs of Cash Management Bills. The Fed added $8.25 billion in weekend repos against no expirations. The pigmen let out another “Huzzah!” and shouted, “Let’s get run a gap, crap, and trap!” All that excess cash exploded into the market in the premarket, but by 11 AM it was exhausted, as most of it had been committed in Thursday’s buying orgy. Bonds had a huge spike on the CPI news, helped along by the cash spewed out by the Treasury, and the fact that for the time being there wasn’t enough TP to absorb it all. Again, the demand was exhausted within minutes. But fear not, the Treasury is coming with another paydown next week which Steve Northwood estimates will be around $11 billion on the 4 week bills. Finally, the Fed has come to its annual year end pumping party. It was late there’s still time to get caught up. Click here to download complete report in pdf format (Professional Edition Subscribers).
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