Wednesday, May 27, 2009

Fed Open Market Operations Update II

I first posted about the Fed's open market operations on May 9th in my post titled Fed Open Market Operations Update. Here are updated versions of those charts.

The Fed has purchased an additional $38.3 billion of treasury bonds since May 9th for a total to date of $130.5 billion:


Here is a cumulative version of this chart so that you can see the rate of growth:


The Fed has purchased $6.8 billion in agency debt since May 9th and a total of $93.3 billion since the program started:


The Fed has also purchased an additional $51.8 billion of agency mortgage backed securities (MBS) since May 9th for a total of $481.5 billion since the program's inception:


Here are the up to date totals for each open market operation type:


Treasury bonds have continued to get beat up over the past few weeks. Ten year treasury bond yields are currently at 3.72% and 30 year bonds are at 4.63%, both up substantially in the past few weeks. The Federal Reserve Open Market Committee (FOMC) last met on April 28-29 and is due to meet again on June 23-24. I was surprised that they did not announce plans for additional treasury bond purchases at the last meeting. Since that time, we have learned from the meeting minutes that the Fed was considering additional purchases. Since treasuries have sold off substantially in the interim, additional purchases are all but guaranteed to be announced following the June meeting, if not sooner. Agency MBS purchases have made up the bulk of the Fed purchases thus far but look for Treasury purchases to substantially increase over the course of the summer.
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