QE to infinity

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TexAsh
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QE to infinity

Does this count as stealth QE?:

Treasury to sell $66 billion in debt next week

http://www.marketwatch.com/story/treasury-to-sell-66-billion-in-debt-next-week-2011-07-07-11580

NEW YORK (MarketWatch) -- The Treasury Department said Thursday it will sell $66 billion in notes and bonds next week, keeping the auction amounts the same as last month. The government will sell $32 billion in 3-year notes /quotes/zigman/4868286 3_YEAR +0.62% on Tuesday, followed by $21 billion in 10-year notes /quotes/zigman/4868283 10_YEAR +0.16% and $13 billion in 30-year bonds /quotes/zigman/4868063 30_YEAR +0.12% . The amounts also matched expectations of many Wall Street bond dealers. The long-term debt sales are reopenings, meaning the debt sold will carry the same coupon and maturity as the original debt.

Edited by admin on 11/08/2014 - 06:05
HappyNow
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Man I hope not!

I've got shorts in play.  Someone tell me this isn't QE please.   What's in the fine print?

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Kiwi
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Not your Father's QE

@Happy

Remember, QE2 consisted of the Treasury selling to primary dealers, and a week later the primary dealers sold them to the Fed. The Fed has shifted into QE2.5, where they are only buying new to replace the old ones they hold that have matured.... so there will be a lot of bonds that the Fed won't be buying, and maybe nobody else will want to buy them at the current rate.

The last couple of bond auctions in June were like that, because there was no guaranteed resale to the Fed, the rate had to rise to get buyers, the prices dropped and the treasury ETFs (IEI, IEF, TLT) took a huge hit. I'd think we will see the same thing this time.

The combination of the market continuing to float up and a bad auction should crush the treasuries. Unless.... there's been some sort of backdoor deal made. In that case, WTFDIK.

SilverTree
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QE∞

You will know its QE when the MSM begs and screams for it; most likely after a major event like a market correction. It will NOT be stealthy it will be pleaded for.

HappyNow
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Kiwi - thanks

Right, that's the fine print.

Last time the Fed bought them back which was the QE effect.   Selling the bonds is not the signal, it's buying them back....and buying back the rollover amount is already in the plan.

Backroom deals always possible.   And if the bonds don't sell easily then a backroom deal becomes likely.

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The man who sto...
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QE: It never ended, just went into stealth mode

To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve’s holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities. The Committee will continue to roll over the Federal Reserve’s holdings of Treasury securities as they mature.

Source [The Federal Reserve Monetary Report to Congress: Monetary Policy over the Second Half of 2010 and Early 2011]

Recommended reading (and listening):
Jim Rickards: Stealth QE, Perpetual Motion QE Machine

http://politicalmetals.com/2011/03/28/jim-rickards-stealth-qe-perpectual-motion-qe-machine/

Kiwi
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Making the sheep perform QE3

Here's a what-if that just occurred to me:

Here's the upcoming auction schedule (off treasurydirect.gov):

Security Auction
Date
Issue
Date
Offer
Amt.
13 wk Bill 07/11/11 07/14/11 27B
26 wk Bill 07/11/11 07/14/11 24B
3 yr Note 07/12/11 07/15/11 32B
10 yr(r) Note 07/13/11 07/15/11 21B
30 yr(r) Bond 07/14/11 07/15/11 13B

What if the big run up in the stock market the last 2 weeks was so they can crash it next week and get an automatic reaction from the hedge fund and retirement fund algos to pile into treasuries? The funds will have lots of fresh cash they just made,  the bond rates won't have to go up because of all the scared money piling in, and the market won't go down enough to cause demands for Fed intervention....so everybody will be happy at the end of the week.

Fiendishly clever, eh?

Just a thought!

HappyNow
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Yep that'd work kiwi as long

Yep that'd work kiwi as long as the market doesn't go down too far, or stay down too long.

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