The Fed stood pat on the Fed Funds target, its hands tied by the fact that even a $70 billion cash injection yesterday could not push Fed Funds anywhere near the current rate, let alone a rate lower than that. Last night Fed Funds were still trading at 2.64, even after the $70 billion injection, and repo rates at the Feds Open Market Operations went into the stratosphere yesterday. Today, they came back to earth, helped in part by the massive Treasury paydowns this week. But this may be as good as it gets. The Treasury will need to start pounding the market with supply again as soon as next week, especially if they have to start raising the money for all of the bailouts, backstops, and rescues they are committing to. Given the level of panic into Treasuries, at current levels, I suspect that Treasuries may represent the greatest short selling opportunity in the history of the Universe since the Big Bang. So let’s call this Big Bang II or BBII for short. 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.
Join the conversation and have a little fun at Capitalstool.com. If you are a new visitor to the Stool, please register and join in! To post your observations and charts, and snide, but good-natured, comments, click here to register. Be sure to respond to the confirmation email which is sent instantly. If not in your inbox, check your spam filter.