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

To: mishedlo who wrote (46508)	12/3/2005 1:32:01 PM
From: russwinter	Respond to of 110194

There does not seem to be any evidence that I can see that the FED is buying LT treasuries.> Oh? 60% of the Fed's SOMA account are notes and bonds: ny.frb.org they typically add or roll them at the auctions. Hit SOMA holdings (at bottom) and then latest, and you can see each note and bond by maturity. It shows the Fed as holding typically 10-25% of each issue. That's quite high as a percentage given that so much Treasury financing has been at the short end up to now, to take advanantage of the all but disappeared yield curve. This is clear evidence that the Fed itself contributes to the Wizard's conundrum via debt monetizing. The Treasury also contributes to the conundrum by piling financings into the short end. This might change now that we are flat, and FCBs are backing down? Therefore I would expect future debt monetization to actually increase in the notes and bonds.

To: mishedlo who wrote (46508)	12/3/2005 2:47:47 PM
From: russwinter	Respond to of 110194

We will get the announcement on the 10 year Treasury Monday, but according to Barrons, Lehman Brothers estimates they sell an additional $8 billion. There will also be a 5 year auction. This will be a big test, and we will see how much the Fed has to monetize (will answer some questions about this claim (), and how much the FCBs take. () Winston and Pinocchio at the Ministry of Truth rectifying, stay tuned for big coupon passes? Message 21939026 "When fiscal policy gets out of whack, monetary authorities face pressure to monetize the debt," Fisher said. He said that to do so would be a "cardinal sin" and "it is the duty of the Fed to refrain from the slightest temptation to monetize deficits or embrace any other inflationary policy." He said that the Fed "can be expected to continue countering inflationary pressures should they arise."