The Fed drained $6.25 billion from the market on Monday, adding $5.25 billion in overnight repos against $11.5 billion in expirations. That brought the 5 day net to a net drain of $3 billion, but that pales in comparison to the $66 billion in Treasury debt paydowns that flushed a mammoth wave of cash into the market last week and this week. Those paydowns are directly responsible for falling short term rates, for bond yields backing off their highs of last Wednesday, and for the stock market rally. Meanwhile Treasury/Agency spreads have begun to widen. 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.
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