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US Treasury Injects Another $30 Billion Into Market

The US Treasury announced today that it would inject another $30 billion into the markets, in an attempt to forestall systemic meltdown. It will pay down another $30 billion in T-bills on March 4.

This brings the 2 week total to $155 billion and it is NOT ENOUGH. Investors and dealers got back $55 billion in cash on Tuesday and another $41 billion today, but they are not buying longer term paper with that cash. The continue to hold short term paper. Some bought stocks yesterday, but today margin calls against losses in longer term Treasuries have spread into stocks.

I have been forecasting this since the bond market turned last summer. The process is unfolding as expected. We had guessed that once the 10 year yield rose above 1%, the problems would start and cascade as bond prices fell and highly leveraged dealers got slaughtered.

Because these massive cash injections from the Treasury are not stemming the meltdown, the Fed is likely to follow up with its own intervention.

This could have an effect opposite to the one desired. It could trigger a collapse in market confidence. Instead of buying more paper, dealers might opt to use the cash to pay down debt and deleverage.

It’s likely at this point that they are approaching zero capital. At this point, they are merely straw front men for the Fed.

I will post updated reports for Liquidity Trader subscriber, with more details and charts, and an ongoing look forward on what to expect on Friday and/or Saturday. For access, take a risk free trial today.

For more on this see Treasury Announces It Will Inject ANOTHER $25 Billion For $125 Billion Weekly Total.


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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