The Fed added a net of $5 billion from the liquidity pool on Friday with a 5 day repo of $5 billion against no expirations. That makes a 5 day net add of $19.5 billion, helping to absorb over 40% of the $47 billion in net new money which the Treasury settled Thursday and Friday. Thanks again to a huge flight to safety bid, plus some help from FCBs, there has been no problem at the Treasury auctions, and there was even enough left over to spur stocks to rally in a light volume environment. A big indirect bid in the auctions this week has gone a long way toward helping to reliquify the markets. I have only half facetiously noted on our message boards that the collapse of the asset backed commercial paper is bullish, because those holders lucky enough to get their cash back at maturity now see big cap stocks as a safe haven.
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