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Thread: FED to expand balance sheet.

  1. #1

    FED to expand balance sheet.

    https://www.msn.com/en-us/money/mark...cid=spartandhp

    Powell said the Fed is about to embark on more permanent operations to make sure the system has enough reserves and the market volatility events are controlled.
    "This volatility can impede the effective implementation of monetary policy, and we are addressing it," Powell said in prepared remarks. "Indeed, my colleagues and I will soon announce measures to add to the supply of reserves over time."


    President Donald Trump sharply criticized the balance sheet reduction, calling it "quantitative tightening" and charging that it was slowing economic growth.
    Powell said the Fed is settling into an "ample reserves" regime and now sees that it is around the level banks need.
    "As we indicated in our March statement on balance sheet normalization, at some point, we will begin increasing our securities holdings to maintain an appropriate level of reserves," he said. "That time is now upon us."
    Where is John Galt?



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  3. #2
    Fed is soaking up Treasuries being dumped by big holders.
    "Let it not be said that we did nothing." - Ron Paul

    The entire internet is the domain of paid shills and bots. If you don't know this by now....

    Israel, under control of the Crown and, ultimately, the Vatican, own the USA. If you don't know this by now....

    Talk to people about liberty. You won't find it on websites, you won't find it in politicians.

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  4. #3
    Quote Originally Posted by devil21 View Post
    Fed is soaking up Treasuries being dumped by big holders.
    Who is dumping? (if demand for Treasuries is weak, interest rates on them should be rising).
    Quote Originally Posted by Swordsmyth View Post
    The quality seems to have dropped significantly since I came here, I guess you get what you pay for.
    Quote Originally Posted by Swordsmyth View Post
    Yes, that is the new tactic from all the trolls.
    They just assert lies over and over no matter how often they are exposed.
    I am Zippy and I approve of this post. But you don't have to.

  5. #4
    Quote Originally Posted by Zippyjuan View Post
    Who is dumping? (if demand for Treasuries is weak, interest rates on them should be rising).
    The better question is who isn't? I haven't run the math but since repos are now pushed out into November (and probably will be again beyond November), at around $40B-$50B per business day, on-the-record- we're looking at numbers in the trillions range. Remember when I posted recently that Chinese were putting up Treasuries as collateral against cash bank loans? Yeah, probably something to do with that...

    "Demand" and rates is meaningless since PDs soak up what isn't selling and repo operations like these are designed to ensure rates aren't affecting by massive sell orders hitting the markets unprepared.
    "Let it not be said that we did nothing." - Ron Paul

    The entire internet is the domain of paid shills and bots. If you don't know this by now....

    Israel, under control of the Crown and, ultimately, the Vatican, own the USA. If you don't know this by now....

    Talk to people about liberty. You won't find it on websites, you won't find it in politicians.

    Visiting the Outer Banks of NC?
    Outer Banks NC Fishing Boat Rentals

  6. #5
    Quote Originally Posted by devil21 View Post
    The better question is who isn't? I haven't run the math but since repos are now pushed out into November (and probably will be again beyond November), at around $40B-$50B per business day, on-the-record- we're looking at numbers in the trillions range. Remember when I posted recently that Chinese were putting up Treasuries as collateral against cash bank loans? Yeah, probably something to do with that...

    "Demand" and rates is meaningless since PDs soak up what isn't selling and repo operations like these are designed to ensure rates aren't affecting by massive sell orders hitting the markets unprepared.
    The repo market is short term- overnight. The Fed trading treasuries for cash for just one day. If they lent out $30 billion one day, it had to be paid back the next day. If they lend out $30 billion the next day, that is not $60 billion outstanding but $30 billion outstanding. There aren't "trillions" out there in repo lending. Here is a link to an interactive chart showing outstanding balances: https://fred.stlouisfed.org/series/RRPONTSYD

    It currently shows $1.4 billion outstanding as of October 9th.

    This series is constructed as the aggregated daily amount value of the RRP transactions reported by the New York Fed as part of the Temporary Open Market Operations.

    Temporary open market operations involve short-term repurchase and reverse repurchase agreements that are designed to temporarily add or drain reserves available to the banking system and influence day-to-day trading in the federal funds market.

    A reverse repurchase agreement (known as reverse repo or RRP) is a transaction in which the New York Fed under the authorization and direction of the Federal Open Market Committee sells a security to an eligible counterparty with an agreement to repurchase that same security at a specified price at a specific time in the future. For these transactions, eligible securities are U.S. Treasury instruments, federal agency debt and the mortgage-backed securities issued or fully guaranteed by federal agencies.
    For more information, see https://www.newyorkfed.org/markets/rrp_faq.html
    https://apps.newyorkfed.org/markets/autorates/temp


    Repo and Reverse Repo Operations

    The New York Fed conducts overnight reverse repo operations each day as a means to help keep the federal funds rate in the target range set by the Federal Open Market Committee (FOMC). Operation results include all repo and reverse repo operations conducted, including small value exercises.
    Here is the announcement of one:

    The following operation has just been announced:

    Note: This is a reverse repo operation

    Deal Date: Thursday, October 10, 2019
    Delivery Date: Thursday, October 10, 2019
    Maturity Date: Friday, October 11, 2019
    Type of Operation: Reverse Repo
    Auction Method: Fixed Rate/Single Price (TBD)
    Settlement: Same Day
    Term of Operation - Calendar Days : 1 Day
    Term of Operation - Business Days : 1 Day
    Operation Close Time: 01:15 PM
    That one was for $1 billion and due to be paid back the next day.

    This one was a bit longer at two weeks:

    Deal Date: Thursday, October 10, 2019
    Delivery Date: Thursday, October 10, 2019
    Maturity Date: Thursday, October 24, 2019
    Type of Operation: Repo
    Auction Method: Multiple Price
    Settlement: Same Day
    Term of Operation - Calendar Days : 14 Days
    Term of Operation - Business Days : 9 Days
    Operation Close Time: 08:15 AM
    That one was $45 billion. There are $22 trillion in US Treasuries out there. No indications of anybody "dumping large amounts" of them.
    Last edited by Zippyjuan; 10-10-2019 at 01:03 PM.
    Quote Originally Posted by Swordsmyth View Post
    The quality seems to have dropped significantly since I came here, I guess you get what you pay for.
    Quote Originally Posted by Swordsmyth View Post
    Yes, that is the new tactic from all the trolls.
    They just assert lies over and over no matter how often they are exposed.
    I am Zippy and I approve of this post. But you don't have to.

  7. #6
    So you say it's short-term overnight but then post an example of it not being short-term overnight. And the short-term overnight only applies if the borrower actually pays the loan back the next day. How do we know they are paying it back? Or is it just coincidence that the balance sheet is expanding again as repos take off AND Powell says "it's not QE". If he's telling the truth that it's not QE, it means the Fed is taking Treasuries back onto the balance sheet but not buying new issues in the open market. It deduces to the Fed taking Treasuries from current holders and not returning them, hence balance sheet expansion but not "QE".
    "Let it not be said that we did nothing." - Ron Paul

    The entire internet is the domain of paid shills and bots. If you don't know this by now....

    Israel, under control of the Crown and, ultimately, the Vatican, own the USA. If you don't know this by now....

    Talk to people about liberty. You won't find it on websites, you won't find it in politicians.

    Visiting the Outer Banks of NC?
    Outer Banks NC Fishing Boat Rentals

  8. #7
    Quote Originally Posted by devil21 View Post
    So you say it's short-term overnight but then post an example of it not being short-term overnight. And the short-term overnight only applies if the borrower actually pays the loan back the next day. How do we know they are paying it back? Or is it just coincidence that the balance sheet is expanding again as repos take off AND Powell says "it's not QE". If he's telling the truth that it's not QE, it means the Fed is taking Treasuries back onto the balance sheet but not buying new issues in the open market. It deduces to the Fed taking Treasuries from current holders and not returning them, hence balance sheet expansion but not "QE".
    The Treasury notes are collateral. If they don't pay, they lose their notes and could be fined or banned from participating in Fed operations- lose their "favored dealers" status.

    Or is it just coincidence that the balance sheet is expanding again as repos take off AND Powell says "it's not QE".
    How much has their balance sheet expanded? By $trillions? Try this link: https://fred.stlouisfed.org/series/WALCL
    Quote Originally Posted by Swordsmyth View Post
    The quality seems to have dropped significantly since I came here, I guess you get what you pay for.
    Quote Originally Posted by Swordsmyth View Post
    Yes, that is the new tactic from all the trolls.
    They just assert lies over and over no matter how often they are exposed.
    I am Zippy and I approve of this post. But you don't have to.

  9. #8
    Quote Originally Posted by Zippyjuan View Post
    The Treasury notes are collateral. If they don't pay, they lose their notes and could be fined or banned from participating in Fed operations- lose their "favored dealers" status.
    Could. Depends on which bank it is. Maybe someone is using JPM as an intermediary? It's not like JPM would ever be fined or lose participation if they were playing intermediary between the Fed and the Chinese, for example. Taking the Chinese Ts for loans from JPM, then JPM passes them back to the Fed via repos. Just a thought...

    (Oh and suddenly there's a phase of a "trade deal" with the Chinese announced in the same time frame. Interesting...)

    How much has their balance sheet expanded? By $trillions? Try this link: https://fred.stlouisfed.org/series/WALCL
    Dunno, don't care at the moment. Let's see what it amounts to in a month or longer.
    "Let it not be said that we did nothing." - Ron Paul

    The entire internet is the domain of paid shills and bots. If you don't know this by now....

    Israel, under control of the Crown and, ultimately, the Vatican, own the USA. If you don't know this by now....

    Talk to people about liberty. You won't find it on websites, you won't find it in politicians.

    Visiting the Outer Banks of NC?
    Outer Banks NC Fishing Boat Rentals



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  11. #9
    Quote Originally Posted by devil21 View Post
    Could. Depends on which bank it is. Maybe someone is using JPM as an intermediary? It's not like JPM would ever be fined or lose participation if they were playing intermediary between the Fed and the Chinese, for example. Taking the Chinese Ts for loans from JPM, then JPM passes them back to the Fed via repos. Just a thought...

    (Oh and suddenly there's a phase of a "trade deal" with the Chinese announced in the same time frame. Interesting...)



    Dunno, don't care at the moment. Let's see what it amounts to in a month or longer.
    Trump calling it a trade deal ("Phase One" of a deal)- China says there is no deal.

    Taking the Chinese Ts for loans from JPM, then JPM passes them back to the Fed via repos. Just a thought...
    With just $2.95 billion listed today as outstanding Repos, if it is China, they aren't borrowing that much this way (neither is anybody else).

    https://fred.stlouisfed.org/series/RRPONTSYD
    Last edited by Zippyjuan; 10-11-2019 at 04:22 PM.
    Quote Originally Posted by Swordsmyth View Post
    The quality seems to have dropped significantly since I came here, I guess you get what you pay for.
    Quote Originally Posted by Swordsmyth View Post
    Yes, that is the new tactic from all the trolls.
    They just assert lies over and over no matter how often they are exposed.
    I am Zippy and I approve of this post. But you don't have to.

  12. #10
    Quote Originally Posted by Zippyjuan View Post
    Who is dumping? (if demand for Treasuries is weak, interest rates on them should be rising).
    From what I understand it's the short term loans that the Fed is monetizing.

    Anyway you're missing the point. Interest rates are not rising BECAUSE the Fed is buying them or threatening to.

    Either way the Fed's balance sheet is rising and the Fed's rate is falling.

    Gosh. Who could've seen that coming? Besides Ron Paul, Peter Schiff and a few members in this forum.

  13. #11
    Quote Originally Posted by Madison320 View Post
    From what I understand it's the short term loans that the Fed is monetizing.

    Anyway you're missing the point. Interest rates are not rising BECAUSE the Fed is buying them or threatening to.

    Either way the Fed's balance sheet is rising and the Fed's rate is falling.

    Gosh. Who could've seen that coming? Besides Ron Paul, Peter Schiff and a few members in this forum.
    The Fed isn't buying that much (they announced they will actually buy $60 billion worth)- meanwhile the government is issuing $1 trillion more a year
    Quote Originally Posted by Swordsmyth View Post
    The quality seems to have dropped significantly since I came here, I guess you get what you pay for.
    Quote Originally Posted by Swordsmyth View Post
    Yes, that is the new tactic from all the trolls.
    They just assert lies over and over no matter how often they are exposed.
    I am Zippy and I approve of this post. But you don't have to.

  14. #12
    Perhaps the word "trade" being used doesn't mean what we're inclined to think it does, as in plastic stuff on Walmart shelves. Lots of things can be traded. Like Treasuries for cash. That fits the banker MO of applying a meaning to a word that is different than the common meaning and not doing anything to alleviate the misconception.

    Seems to me that the only logical explanation is that the Fed is repo'ing Treasuries from current holders, such the Chinese. It's either that or a bank(s) are insolvent and dumping Treasuries to raise cash. I'm sticking with foreign/institutional holders dumping.
    Last edited by devil21; 10-12-2019 at 12:04 PM.
    "Let it not be said that we did nothing." - Ron Paul

    The entire internet is the domain of paid shills and bots. If you don't know this by now....

    Israel, under control of the Crown and, ultimately, the Vatican, own the USA. If you don't know this by now....

    Talk to people about liberty. You won't find it on websites, you won't find it in politicians.

    Visiting the Outer Banks of NC?
    Outer Banks NC Fishing Boat Rentals

  15. #13
    Quote Originally Posted by Zippyjuan View Post
    The Fed isn't buying that much (they announced they will actually buy $60 billion worth)- meanwhile the government is issuing $1 trillion more a year
    You're comparing apples to oranges. The proper comparison is to compare how much the Fed is printing (60 billion a month) with the grand total that the Fed has printed (4 trillion).

    If they continue at that pace they'll go from 4 trillion to over 4.7 trillion in a year. That a pretty significant increase.

  16. #14
    The Fed quietly announced that repos will now run into 1Q20. They didn't even wait a week after saying repos until November to push it out even further.
    "Let it not be said that we did nothing." - Ron Paul

    The entire internet is the domain of paid shills and bots. If you don't know this by now....

    Israel, under control of the Crown and, ultimately, the Vatican, own the USA. If you don't know this by now....

    Talk to people about liberty. You won't find it on websites, you won't find it in politicians.

    Visiting the Outer Banks of NC?
    Outer Banks NC Fishing Boat Rentals



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