Fed Will Purchase 75% of New 30yr Treasury Supply This Month

Adam Taggart
By Adam Taggart on Thu, Feb 7, 2013 - 7:01pm

From Zero Hedge:

We urge readers to read the bolded section below, which comes straight from this quariter's Treasury Borrowing Advisory Committee (i.e., Primary Dealers) presentation to the Treasury Department, and explain, with a straight facejust how the Fed will ever be able to not only stop monetizing debt and injecting $85 billion of flow into the stock market, but actually sell any holdings.

Federal Reserve Holdings (1 of 2)

As of Dec 26, 2012 the Federal Reserve System Open Market Account (SOMA) held approximately $300 billion in 21+ year US Treasury debt

  • SOMA holds 41% of the 30y Treasury bonds issued since 2009
  • In Feb 2013, Fed will buy 75% of new 30y Treasury supply

At what point does the rest of the world start questioning our ability to service and repay our soveriegn debt?

While I'm gobsmacked they've haven't already, I'm pretty sure it will happen before the point when the Fed is buying 100% of it. By that measure, we're not too far away...

Lots of data for the quantitative wonks here in the full TBAC report:

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5 Comments

westcoastjan's picture
westcoastjan
Status: Platinum Member (Offline)
Joined: Jun 4 2012
Posts: 572
too many other fires

Hate to say it but everyone else is too busy putting out their own fires... somehow I cannot help but think the Fed is counting on this too.

Jan

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
The Unveiling of the Bride.

 

My guess is that so many countries are holding so much US script that they are deliberately turning a blind eye.

If you find your stash is counterfeit, are you going to trumpet the fact loudly? Or will your eyes narrow in a rat-like expression as you try to palm them off onto the superbly gullible, like Australia or Madagascar?

I think that everything would turn pear-shaped when the US does not accept its own script for goods that it exports. That is not going to happen for a long time.

But there are glimmers. Haven't two states now started using some other form of exchange? I expect that if ridicule does not bring them into line then they might accede to the persuasion of the rifle.

If that fails, then there might be The Unveiling of Bride.

mobius's picture
mobius
Status: Silver Member (Offline)
Joined: May 18 2009
Posts: 160
Inconceivable!

Quantitative Easing merits Indigo Montoya's quote from the princess bride:

You keep using that word. i don't think it means what you think it means.

Cheers folks. 

KugsCheese's picture
KugsCheese
Status: Diamond Member (Offline)
Joined: Jan 2 2010
Posts: 1447
Isn't most new US debt 2 year

Isn't most new US debt 2 year and under?  So if new 30 yr is relatively small only crony central banks would buy it and stupid investors.

KugsCheese's picture
KugsCheese
Status: Diamond Member (Offline)
Joined: Jan 2 2010
Posts: 1447
Investment Criminality
Arthur Robey wrote:

 

My guess is that so many countries are holding so much US script that they are deliberately turning a blind eye.

If you find your stash is counterfeit, are you going to trumpet the fact loudly? Or will your eyes narrow in a rat-like expression as you try to palm them off onto the superbly gullible, like Australia or Madagascar?

I think that everything would turn pear-shaped when the US does not accept its own script for goods that it exports. That is not going to happen for a long time.

But there are glimmers. Haven't two states now started using some other form of exchange? I expect that if ridicule does not bring them into line then they might accede to the persuasion of the rifle.

If that fails, then there might be The Unveiling of Bride.

 

I find it hard to believe given the criminality in all other investment products that gold is immune from it.  A statistically valid sample of gold bars should be inpected by two objective parties to determine the extent of debasement of gold if it exists on a large scale.

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