Today’s Fed QE 9/25/20

As usual, straight from the bowels of the NY Fed, bought from Primary Dealers yesterday and settling today.

$1.732B Coupon Purchase 2020-09-24  – NYFed treasury securities operations

Liquidity moves markets!

Follow the money. Find the profits! 

This is part of the Fed’s committment to buy $80 billion per month of Treasury paper from Primary Dealers, paying for the purchases by crediting the dealers’ checking/trading accounts at the Fed with newly imagined moolah.

The Fed says it will buy another $8 billion or so today, and about $1.75 billion on Monday. It will post the purchase schedule for the next two weeks also on Monday, but you can count on it averaging around $20 billion a week.

The Fed also buys around $80 billion a month or so of MBS from the dealers, but those are forward contracts which the Fed settles with them only in the third week of every month. We’re in a dry spell right now.

Meanwhile the market must absorb a shitload of Treasuries here at the end of the month without much help from In the Name of Jaysus! Praise the Load. Of fresh cash that’s coming in mid October. Not soon enough.

For more background on this nonsense here’s a post I wrote earlier this week.

And for an in depth analysis, outlook, pretty charts, and a suggestion or two on how to trade or strategize around this crap, check out Liquidity Trader. I’ll post a weekly QE update and outlook later today. Meanwhile here’s my latest look at the macro liquidity factors that drive the stock market.

Macro Liquidity Rising But Other Issues Intrude

Composite liquidity continues to rise, but at a slower pace than in the second quarter as the Fed has slowed QE. That reduces the cash flowing into Primary Dealer accounts, which in turn contributes to a slowing in secondary liquidity drivers.

“Slowing” is a relative word, however. Historically, the numbers remain gargantuan.

No, something else is holding the market back. Here’s what that something is, and what we’re going to do about it.

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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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