The Fed pulled $750 million out of the liquidity pool on Tuesday. It added $9.5 billion in 3 day repos against expirations of $9.5 billion. Given the length of the term it looks as though they may do substantial adds on Wednesday and Thursday to help with the settlement of $19.9 billion in new Treasury paper. $16 billion of that was in the 4 week bill auctioned today. FCBs took a larger than usual $3.7 billion of the issue, but it was still less than ¼ of the new cash raised, causing the rate to ratchet up. The Treasury also took the market by surprise, announcing that it will auction $6 billion of 6 day CMBs on Thursday. 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.