On March 3, the Fed converted Not QE into Panic QE. Since then it has pumped $766 billion in cash into Primary Dealer accounts. At the same time the US Treasury issued “only” $147 billion in new debt. So in essence, the Fed issued $619 billion in excess cash.
Other than the hyperinflationary implications, what good has it done? What does it mean for us looking ahead.
The Fed has undertaken so many rescue programs since Friday that my head is spinning. It’s hard to keep track of it all. A schedule…
Even before COVID-19 the trend was clear that the Treasury would need to keep borrowing money hand over fist. Now the deficit will explode. This is a hideous problem for financial markets in this condition.
With no prior announcement or clue, the Fed bought $37 billion in Treasury coupons from Primary Dealers on Friday. To pay for them it deposited $37 billion into dealer accounts at the Fed.
It was the largest single day POMO (Permanent Open Market Operation) purchase since the days of TARP and QE 1 in 2009.
It came without warning. I was so glued to the intraday live charts on Friday, I wasn’t even aware that the Fed had taken this emergency action until after the close.
We sure as hell saw the result. But this is only the beginning of this story.
Investors and leveraged speculators took the coronavirus panic straight to the bond market last week. Dealers, bless their little hearts, were long up the wazoo. Talk about smellin like a rose.
But somebody was short. Big somebodies. They’re dead. We don’t know where the bodies are buried yet, but the Fed will need to exhume them and fill the graves.
Suddenly the trend of Federal Withholding tax collections is in critical condition. Subscribers, click here to download the report. Get this report and access to…
The patterns on the charts of T-bills and the 10 year note are unprecedented. Something terrible has happened in the market. The Fed will have…
The market got way ahead of the amount of cash that the Fed was pumping into dealer accounts in February. That took a toll, and…
We knew that Not QE would fall well shy of Treasury issuance in February, and that that would be a problem for the markets. Subscribers,…
The February supply increase caused the bond rally to stop in its tracks. But that will change in March. Subscribers, click here to download the…
