FED: Running Out of T-Bills
By my calculation, the Fed has only about $55 bn in T-Bills left in stocks, down from $275 bn one year ago.
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aleablog [dot] com
May 7th, 2008 at 12:22 pm
[...] The Fed is running out of T-bills. (Alea) [...]
May 7th, 2008 at 1:21 pm
Maybe they could buy some of the one-year bills that the Treasury will be offering to fund its growing gap. Oh, wait, they don’t buy T-bills, they only sell them these days. Last open market purchase was 5/3/2007. No wonder the monetary base looks anemic, especially for a loosening cycle.
May 8th, 2008 at 3:45 am
[...] alea says ” FED: Running Out of T-Bills “ [...]
May 8th, 2008 at 11:20 am
T-Bills And CPMKTL Liquidity Index
In April, the CPMKTL liquidity instruments declined for the first time in nine months, down 1.94% to $7.2 trillion and now account for 22.00% of the investment grade U.S.capital markets.
This decline was largely due to activity of short term federal agency bonds and Treasury bills. The market for short-term federal agency bonds decreased by almost 10% with nearly all of the decrease due to bonds that were called or matured in April.
The market for Treasury bills dropped by 6.5% to back below $1 trillion despite the Federal Reserve Board further decreasing its holdings of Treasury bills. The Fed now holds less than 10% of the outstanding Treasury bills. From 2003 to end of 2007, the Fed typically held 25% to 30% of Treasury bills.
May 8th, 2008 at 3:06 pm
How do you come to this number ? My back of the envelope calculation was about 60 percent of their treasuies were loaned or otherwise committed. Similarly , Interfluidity has a post on this subject and notes 275 remains in uncommitted treasuries held by the Fed. thanks in advance for your feedback.
May 8th, 2008 at 3:36 pm
I am talking about T-Bills, not treasury notes or treasury bonds.
My number is:
T-bills held last week [$70 bn according to the may 1st H.4.1] minus what was rolled off [$5 bn] and what was sold outright yesterday $ 10bn.
Today H.4.1 shows $65 bn T-bills held because yesterday’s outright sale of $10 bn settles today and the H.4.1 is as of last night, so my number is right ON.
H.4.1 are here:
http://www.federalreserve.gov/releases/h41/
May 8th, 2008 at 3:49 pm
Regarding the post at Interfluidity, the drop in T-bills, treasury notes and treasury bonds held stands at $ 247 bn, this is the result of the sterilization to make room for the TAF, discount window borrowings and the PDCF so the balance is $ 542 bn, this will drop by about $ 50 bn to accommodate the TAF increase [if it is to be sterilized , most likely it will].
The TSLF doesn’t need to be sterilized [it's a swap] and the loaned T-bills/notes/bonds paper stays on the fed balance sheet.