Skip to comments."Flip That Bond" Fed Monetizes 50% Of Primary Dealer Bid From Last Wednesday's 7 Year Auction
Posted on 04/04/2011 8:59:40 AM PDT by RobertClark
Grotesque, meet tragicomic. In today's POMO the biggest CUSIP monetized was QB9, of which the Fed purchased $5.99 billion (of a total $8.03 billion). And here's the kicker: when we commented on last week's 7 Year auction we once again were rather prophetic: "Altogether a weak auction but it's not like the PDs would let it fail especially not with QB9 becoming the next "flip back to the Fed" bond for the PD community." And tadaa: today, the Fed bought back 50% (!) of the Primary Dealer take down ($12.115 billion) of last Wednesday's (yes that would be the QB9) auction. This is probably the fastest episode Flip That Bond on record. Anything else and the Fed would be monetizing bonds that had not yet settled.
Oh, my... this is not good... I can’t imagine why gold is trading above $1400 these days...
I have been inspired. I am going to write a check from one account with no balance to deposit into another account with no balance. See, finance is easy the Bernanke way!
Does anyone believe that there are ANY Congressional Reps or Senators who understand what this sentence means? We are screwed while the government spends us broke and the Primaries make BILLONS! Oh, don't forget, peasants... your tax returns are due in Washington two weeks from today. Better hurry up and get your money in!
Does anyone get a commission for these sales? If so, who and how much, anyone know?
No one wants US Treasuries. The country is a joke now. The drooling idiots watch Obama TV and live in a ddream world.
Does anyone believe that there are ANY Congressional Reps or Senators who understand what this sentence means?
I can think of 2 of them, and they both have the same last name. 1, a senator from Kentucky. The other, his father, a representative from Texas.
Even if we would have a vibrant housing and construction, have ""real GDP at 6% we would still be trillion over budget.
The banks call that kiting. It is illegal. Wait a minute....
There is a tremendous amount of truth in that statement. The Lamestream media will focus only on the bid / cover ratio that is being touted by the treasury. Of course, when you assure primary dealers that you will buy the worthless paper from them for a premium, they will line up to take down the auction and keep the total bps within target. If the PD's were not flipping the bond issues to the Fed, more than 70% of all bond auctions would go uncovered and rates would skyrocket in an attempt to draw foreign
suckers bidders back into the fray. We are sooooo screwed that most people have no idea how fast the dominoes could fall at the drop of a hat now.
Well, 2 out of 535 is a good start. I love Texas!
If I understand you correctly, either interest rates will skyrocket, or the Fed will become overladen with worthless securities. I cannot envision a scenario where this will be good for the economy.
Japan’s been doing it for over 20 years. We’ve got a long way to go.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.