Relevant:
- Stocks Will Get Crushed By New Treasury Issuance; End of QE
- Fed announces it will buy $35 billion in MBS Reinvestment Program in next month for total purchases of $85 billion
- "Such a Deal" (On The Debt Ceiling)
- Fed Adds and Treasury To Add More Monday
- Wall Street's Pile of Unwanted Treasuries Exposes Market Cracks
2012-05-16 — wallstreetexaminer.com
An underlying "situation," which no one was talking about, was that the market had to settle $35 billion in net new Treasury paper today. That sucked cash out of the accounts of Primary Dealers and others who had bought that paper. The Fed was probably quickly funding that, if it hadn't already greased the skids to counter the Greece skid. The Fed normally settles all of its monthly forward MBS purchases, usually around $30 billion worth, with the Primary Dealers around mid month. It may have sent the cash out on Monday for this round, as suggested by Monday's big drop in Treasury yields.
Source: Wall Street Examiner (http://s.tt/1bVP2)
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