Ares
15th December 2010, 09:29 AM
After a rare one day respite, Brian Sack has reentered the market and bought $6.780 billion in bonds maturing between 12/31/2014 and 05/31/2016.Not surprisingly, not one single bond of the most recent issuance (the PJ3 of November 23) was tendered for: the loss on the transaction to the Primary Dealers would have been so big not even multi point, and completely unauditable bid/ask spreads by the Fed, would succeed in making the PDs whole on the purchase. Same goes for the auction just preceding it- the PE4 of October 27 of which a token $1 million was monetized. Which is why the bulk of the repurchasing activity was focused on the bonds NL0 and NP1, both of which were auctioned off this summer at substantially lower prices. Just these two cusips alone accounted for $2.5 billion of total monetization. What is more notable, if completely irrelevant until such time as the Fed has to sell well over $2 trillion in securities in addition to the $2 trillion in bonds that have to be issued by the US Treasury, is that the Fed's holdings now amount to $972 billion in total: to summarize: China added $15 billion in Treasurys in all of October. The Fed purchased almost the same amount this week alone. As we calculated previously, the Fed will surpass $1 trillion in holdings in under a week starting today.
<img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/havenstein/Top%20Holdings%2012.15.jpg"/>
http://www.zerohedge.com/article/end-todays-68-billion-pomo-total-fed-treasury-holdings-now-pass-hits-972-billion
<img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/havenstein/Top%20Holdings%2012.15.jpg"/>
http://www.zerohedge.com/article/end-todays-68-billion-pomo-total-fed-treasury-holdings-now-pass-hits-972-billion