This is a syndicated repost published with the permission of NY Fed | Treasury Securities Operations. To view original, click here. Opinions herein are not those of the Wall Street Examiner or Lee Adler. Reposting does not imply endorsement. The information presented is for educational or entertainment purposes and is not individual investment advice.
Straight from the bowels of the NY Fed, in the name of Jaysus, Church of Fed, Praise the Load!
$6.001B CouponPurchase 2020-09-30 NYFed treasury securities operations
In fulfillment of the Load’s promise to buy $80 billion a month in Treasuries and another $80-100 billion a month in MBS, straight from the Primary Dealer straw middlemen.
Another $1.75 billion in Treasuries on the docket for today. The MBS purchases are also ongoing on a nearly daily basis, but the Fed only settles them in the third week of every month. The dealers get a huge wad of cash payments from the Fed that week, which is why the markets usually pop a woody that week. So watch out, bears! This month, that starts October 14.
Always remember! There’s only one way that the Fed gets QE into the system. That’s via the checking/trading accounts of the Primary Dealers at the Fed. The Fed pays them. It’s then their money to play with as they please. Dealers will be dealers. They’ll buy stuff, market the crap out of it, mark it up, and move it out. Next week, more cash from the Fed, lather rinse repeat.
Nice work if you can get it.
I’ll be posting an in depth update on the QE impact outlook, and the other stuff that affects it, later today. For now, here’s the latest. It remains highly pertinent.
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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