The Fed pulled a net of $1.5 billion out of the liquidity pool on Tuesday, even as it faces a huge wave of Treasury supply. It pumped in $8 billion in overnight repos against expirations of $9.5 billion. The Treasury raised $4 billion in new cash at Monday’s bill auctions, and today announced a $23 billion CMB to be auctioned tomorrow. The 4 week bill raised new cash of $17 billion. All of that settles Thursday. They settle net new money of $7.7 billion in 2 and 5 year notes on Wednesday. The Fed’s drain today came as a shock to the market (and to me) and exacerbates the supply pressure. The 4 week bill auction benefited from a huge flight to safety bid as investors fled from stocks worldwide. Click here to download complete report in pdf format (Professional Edition Subscribers).
Try the Professional Edition risk free for thirty days. If, within that time you don’t find the information useful, I will give you a full refund. It’s that simple. Click here for more information.
