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Started By
Message
re: Big FOMC Meeting Today
Posted on 12/18/14 at 8:53 am to BennyAndTheInkJets
Posted on 12/18/14 at 8:53 am to BennyAndTheInkJets
quote:
DON'T FIGHT THE FED. EVER. You will never win.
AMEN!
quote:
The Fed will provide a total of $300bn under the program, with the first such offering completed on Dec-8th. It was a 28-day "secured deposit" paying 10bp (annualized) for $50bn.
quote:
At the same time the US Treasury has issued a larger than usual amount of treasury bills recently. Since the Term RRP with the Fed is effectively the same as purchasing a treasury bill (particularly at 10bp), the Fed's $300bn program (combined with the existing facilities) effectively "crowded out" the bills market. This ended up pushing short-term treasury yields higher - while yields on longer-dated treasuries kept falling (see chart).
Sober Look
1
Posted on 12/18/14 at 9:28 am to Blakely Bimbo
The December term facility operations were an absolute blessing from the Fed. They actually listened to market participants about how bad year-end would be if they just kept the overnight reverse repo facility as is. Now money funds and others can invest over year-end with the Fed and leave dealers with excess slack for the rest of the market to get invested as well at (hopefully) positive/non-zero rates.
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