Buyback
March 27th, 2009 12:02 pm | by John Jansen |The Federal Reserve bought about $ 7.5billion of 2year through 3 year paper. It was about 1/3 of what dealers offered to them.
The purchase was concentrated. Very concentrated as about 75 percent of what they bought was represented by one issue, the 1 3/8 March 15 2012. That is the benchmark three year note and they procured about $ 5.6 billion of that issue.
There is a very small sample size of just two buybacks but there is a pattern developing. In the first operation the other day when they purchased the 7 year sector they relieved the street of $ 2.8 billion of that issue. They did that the day before the 7 year note auction this week.
The next large auction by the Treasury will be a 3 year note early in April. They certainly are monetizing the debt.
4 Responses to “Buyback”
By Bman on Mar 27, 2009 | Reply
John, any opinion on monetizing the debt? Is this the new cause of concern expressed from China, etc..?
By Alex on Mar 27, 2009 | Reply
Bman,
China doesn’t like being the largest creditor. I think that is what they find the most irksome.
By Bman on Mar 27, 2009 | Reply
As their economy completely disintegrates they will be happy to be getting 3, 4, 5% coupon income.
By Michael Krause on Mar 27, 2009 | Reply
Wow.. Look how the market gamed the Fed. Selling on the thirty year. I guess the shorts aren’t scared of a few billion long maturity purchases on Monday, right?