Mover Mike

Thursday, again, was a particularly active day at the FED with regard to TOMOs. $19.250 Billion of securities were accepted for one day; that $20 Billion of last week was rolled for not seven days but six days; and $8 Billion for 14 days. That's almost $48 Billion of new money that magically appeared in the system, created out of thin air by the FED.

TOMOs Federal Reserve Mover Mike

Update:

With the arrivals of the holidays, it's important that you not worry about an adequate supply of money available. Keeping that in mind, the FED issued this statement

In response to heightened pressures in money markets for funding through the year-end, the Federal Reserve Bank of New York’s Open Market Trading Desk plans to conduct a series of term repurchase agreements that will extend into the new year.

The first such operation will be arranged and settle on Wednesday, November 28, and mature on January 10, 2008, for an amount of about $8 billion. The timing and amounts of subsequent term operations spanning the year-end will be influenced by market and reserve developments.

In addition, the Desk plans to provide sufficient reserves to resist upward pressures on the federal funds rate above the FOMC’s target rate around year-end.

In addition, the FED executed two TOMOs this week:

Monday $10.25 Billion
Tuesday $14.75 Billion.

The Fed Funds target is 4.50%. The TOMOs had rates as low as 3.90%. You are looking at another FED rate decrease at the next meeting. Yesterday the 2-year treasury broke the 3% level, that's a 1.5% spread with Fed Funds and the 10-year treasury broke 4%, the 11th largest fall in the 10-year T-bond rate in one day since 1962! Clearly, there is a move to buy safety.

Is it time to refinance again?

10-Year Treasury 2-Year Treasury TOMOs