Since when has the Treasury ever pre-announced the exact maturities that they will buy and when?
It is almost like they are trying to manipulate the market prices on a day to day basis.
At best the total $300 billion is probably less than 1/5th of total treasury issuance (not counting TARP, etc, for fiscal 2010).
By the way, I calculated that Treasury interest cost has decreased and is running around $250 Billion, down significantly from two years ago due to much lower rates and short duration of treasury maturities. Now that’s really smart isn’t it?
But… in 4-5 years the total outstanding debt (not just publicly-held debt) should be in the $15 Trillion range and if rates back up (oh no, never) to say, just to be conservative, 6%, then total gross interest cost would be $900 Billion or 25% of the gross federal budget at today’s estimated levels (ha-ha to that too).
It’s almost a mirror image of when the Bank of England pre-announced gold sales in 1999 (at the bottom of the market). Except this time, they are trying to drive the asset concerned UP, rather than down. I suspect that Bernanke will have the same success here ultimately that Gordon Brown did. Gold did originally go DOWN after the BOE announcement and took a few months to recover, but we all know now that the Bank of England sale marked the low in the bullion market. Could Bernanke’s first long dated Treasury purchases represent the peak in the long bond?
Tentative Outright Treasury Operation Schedule
|OPERATION DATE||SETTLEMENT DATE||OPERATION TYPE||MATURITY/CALL DATE RANGE|
|March 25, 2009||March 26, 2009||Outright Treasury Coupon Purchase||02/29/16 – 02/15/19|
|March 27, 2009||March 30, 2009||Outright Treasury Coupon Purchase||03/31/11 – 04/30/12|
|March 30, 2009||March 31, 2009||Outright Treasury Coupon Purchase||08/15/26 – 02/15/39|
|April 1, 2009||April 2, 2009||Outright Treasury Coupon Purchase||05/31/12 – 08/31/13|
|April 2, 2009||April 3, 2009||Outright Treasury Coupon Purchase||09/30/13 – 02/15/16|