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Yesterday’s Fed QE

$3.601B Treasury Coupon Purchase 2020-09-21  per NYFed treasury securities operations

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Market Dough Gets Punched Down

Surprise, surprise! They pumped the money in but the market didn’t rise.

The Fed has been in the process of pumping $88 billion into Primary Dealer accounts this week in the form of its regular monthly MBS purchase settlements. Most of it is done. $22.7 billion of it will settle on Monday September 21. That will be the last MBS settlement until October 14-21.

Meanwhile, the Fed continues to purchase and settle Treasuries virtually every day. Over the past week that’s amounted to a total of about $37 billion. That means that a total of $103 billion in QE settled this week. That’s how much cash the Fed pumped into Primary Dealer accounts.

It didn’t matter. The stock market sucked gas. Bonds treaded water. It sure looks as though the Fed has somehow managed to magically peg bond yields just below 0.80% on the 10 year. The Treasury issued $104 billion in new coupon paper over the past week and that didn’t depress the market? It’s a miracle.

But isn’t it strange that the amount of QE and the amount of Treasury coupon issuance was virtually the same.

Uh… No.

But some other stuff sure as heck is, and you need to know about it.

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