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Hidden Paydown Spurs Rally – Professional Edition Fed Report

The market put on a good show this week, rallying in the face of $57 billion in new Treasury supply. It also got some help from the Fed, which bought $7.5 billion of Treasuries and $2.7 billion of Agencies in Open Market Operations earlier in the week. This afternoon it announced that for the week as a whole it bought a net of $33 billion in MBS paper through its asset managers in transactions which are not restricted to Primary Dealers, and PD data released today suggests that they are not involved in selling this paper to the Fed. In addition, the Fed did not settle any MBS purchases this week after closing on $168 billion last week. In fact, in a quick review of the just released H41, the Fed did very little to boost the markets this week. The new TALF program was a dud.

While these limited operations probably helped to buoy the market, on the other hand, FCBs did not give the market much help, adding only $5 billion to their Treasury holdings while cutting GSE holdings yet again. (details to be posted tomorrow).

So how did the market manage to do so well in the face of such tepid assistance from the central bankers? 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.


  1. Lee Adler

    Always open to good ideas. Getting this report to meet everyone’s need has been a wrestling match as the Fed and Treasury have mushroomed their programs.

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