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Today’s Fed QE 9/29/20

Straight from the bowels of the NY Fed: $1.732B Coupon Purchase 2020-09-28 NYFed treasury securities operations

Yesterday the Fed also posted its twice a month schedule of QE Treasury purchases. As usual it calls for a continuing purchase rate of roughly $80 billion per month. There’s nothing on the docket for today, then $6 billion on Wednesday and $1.75 billion Thursday. These are all next day settlements.

MBS purchases and schedules are reported seperately. They’re scheduled according to how much of the Fed’s existing holdings were paid off in the past month. They match that, plus add another $40 billion.

Lately the totals have been around $80-100 billion per month. These are forward purchase contracts which the Fed only settles in the third week of each month, leading to a big QE cash bulge in the accounts of Primary Dealers. Keep in mind that even the replacement purchases are new cash to the Dealers.

I cover these schedules and their expected impacts in depth at Liquidity Trader.

Here’s the latest post. I expect to post a new one today on a related and extremely important subject.

Mr. Minuschin’s Erection To Boost The Election

We have known for a couple of months that there would be a mountain of Treasury supply hitting the market at the end of September. We also knew that Fed QE would be far from adequate to absorb this supply. So I have expected something bearish for stocks at the end of September. This could spill over into the first week of October.

But then things get hairy for bears, with potentially happy days for bulls. Unfortunately, we have a little problem this week. There’s no visibility. We don’t know what they have planned for the next couple weeks. That’s different from usual, where we can usually see ahead for a week or two because we know the Fed’s QE schedule, and also pretty much know how much Treasury supply to expect.

Now, thanks to the exigencies of the past pandemiconomic US Treasury fund raising back in March and April, we don’t have that luxury on Treasury supply, which forces us to surmise some things.

Here they are.

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Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also publish LiquidityTrader.com, 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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