Fed - More Liquidity Withdrawal - $200 Billion

[THE-BEAKER]

they sneaked this one in without no one really seeing it.

another tightening meaure


February 23, 2010
TG-560

Treasury Issues Debt Management Guidance on the
Supplementary Financing Program

WASHINGTON –The U.S. Department of Treasury today issued the following statement on the Supplementary Financing Program (SFP):

"Treasury anticipates that the balance in the Treasury's Supplementary Financing Account will increase from its current level of $5 billion to $200 billion. This will restore the SFP back to the level maintained between February and September 2009.

This action will be completed over the next two months in the form of eight $25 billion, 56-day SFP bills. Starting tomorrow, SFP auctions will be held each Wednesday at 11:30 a.m. EST, unless otherwise noted."


http://www.ustreas.gov/press/releases/tg560.htm

 

[dhpar]

this is not going to impact liquidity in any significant way. banks will switch reserves which sits idle and earn 25bps for these 1 year bills which will earn about 40bps. in 1 year time it will only put more pressure on the treasury refinancing.

 

[Illum]

Interpretation of article on Citi not allowing runs on them. Is this because government is dumping and wants Citi to be able to stand up without them? Maybe that is too over the top, Im prone to that. On the other hand, now is a good time to get out of there for gov, and it seems like the announcement is meant for this. What run could happen with government backing?

Anyway more stealth exiting by government, unless I am viewing it wrong.