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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Wyätt Gwyön who wrote (45532)	11/15/2005 10:09:43 AM
From: russwinter	Respond to of 110194

Ahhaha referred to temporary operations as being the key driver at least as far as Fed funds targeting. Message 21885533 I would say there's more to interest rates than the Fed fund. But, in a sense he is correct, at least in term of short term influences. For instances the Fed goosed it's repos outstanding by about $12 billion in the last week to help sell the big Treasury auctions. That kind of juice when they exercise it can trump what the FCBs are doing, as they typically buy $2-4 a week at least when they are active, which they haven't been of late. The perms are usually less than $1 billion a week. So temps are the margin in all this. However, over the longer term repos smooth out, and in my view that makes perms and FCB custodials the primary drivers. Combined the two total $2.222 trillion in securities held (with FCBs holding twice the Fed)dwarfing the $20-35 range billion repo pool.