The Fed's 30 Minute Agency Monetization Window

10-08-2009 • Zero Hedge

Much has been said on Zero Hedge about the Fed's monetization of Treasuries, usually via the NY Fed's POMO activities, which on occasion buys back Treasuries as promptly as 5 days after any one given auction. Yet we were dumbfounded by this piece of information, presented to us by Jim Bianco, which demonstrates that the Fed's monetization of Agenciesis far more blatant than anything even encountred in Treasuries.

Below is the 10:00 am announcement of a new $5 billion auction of 2 Year Fannie Agencies:

A mere half hour later, the NY Fed announced that as part of tomorrow's "Outright Agency Coupon Purchase" precisely this CUSIP would be one of the securities repurchased:

These shell games are getting tiresome. A half an hour turnaround time between issuance and buyback? Really Ben?

As Jim Bianco comments, some answers are far overdue, when trying to explain this most blatant example of monetization to date.

1. Who bought these securities at auction? The potential for foul play here is high if the news of such a buyback accidentally leaked to a few individuals in the market

2. Who does the Federal Reserve think it is fooling by monetizing in such a roundabout way?

Perhaps it is time for another probing interview by administration darling Steve Liesman of Tim Geithner. Hopefully this time he won't lie as blatantly as he did last time when he claimed: "The Fed is absolutely not monetizing debt" (9 mins, 9 seconds into the clip)