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Fed Paid Primary Dealers $92 Billion Per Day Monday and Tuesday

The Fed has cut back its direct cash injections to Primary Dealers this week. So far it has bought approximately $92 billion per day in Treasuries and MBS from the dealers on both Monday and Tuesday. That’s down from more than $110 billion per day last week.

Of Monday and Tuesdays totals, $72 billion per day have been next day settlements of Treasuries. The rest are forward purchases of MBS that won’t settle until May.

Liquidity moves markets!

Follow the money. Find the profits! 

So the Fed will mainline about $360 billion in new money into the accounts of Primary Dealers this week. Net new Treasury supply will total $288 billion, so far at least. The Fed will absorb all of that and will leave $82 billion for the dealers to either play with or pay pay the margin man knock, knock, knockin at their doors.

Judging by the stock market action since last Wednesday, the dealers are opting to pay the margin man. The probably have no choice. They’re broke. The Fed is in the process of owning the market and becoming the market.

The Charge of the Light Brigade

The Fed injected around $600 billion into the markets and the banking system last week. That’s about $2,000 for every American, and it was just one weekly installment. All in the valley of Death rode the 600. We are the 600 and the Fed is leading us into the valley of Death.

Meanwhile banking indicators suggest that the sickness is getting worse, not better.

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Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also publish, and was lead analyst for Sure Money Investor, of blessed memory. I developed David Stockman's Contra Corner for Mr. Stockman. I’ve had a wide variety of finance related jobs since 1972, including a stint on Wall Street in both sales, analytical, and trading capacities. Prior to starting the Wall Street Examiner I was a commercial real estate appraiser in Florida for 15 years. I was considered an expert in the analysis of failed properties that ended up in the hands of bank REO divisions, the FDIC, and the RTC. Remember those guys? I also worked in the residential mortgage and real estate businesses in parts of the 1970s and 80s. I have been charting stocks and markets and doing analytical work since I was a teenager. I'm not some Ivory Tower academic, Wall Street guy. My perspective comes from having my boots on the ground and in the trenches, as a real estate broker, mortgage broker, trader, account rep, and analyst. I've watched most of the games these Wall Street wiseguys play from right up close. I know the drill from my 55 years of paying attention. And I'm happy to share that experience with you, right here. 

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