From an initial $75 billion per day when the Fed announced the launch of Unlimited QE in mid-March, the US central bank first reduced its daily buying to $60 billion per day, then announced another ‘taper’ in its bond-buying program to $50 billion per day, which was followed by a reduction to $30 billion per day, which then was again cut in half to $15 billion per day. Then, four weeks ago the Fed again slashed its daily POMO by another 33%, to $10BN per day, before cutting it to $8 billion three weeks ago, then again to $7 billion one week later last week, and to $6 billion last week. Fast forward to today when, in its latest just published schedule, the Fed unveiled – as we hinted last night – that in the coming week it would purchase “only” $5BN per day, or a total of $20BN for the week (with Monday a holiday).
The Fed is continuing the practice of incremental tapering, and providing a weekly preview of its purchasing operations, which in the coming week will amount to just $20BN in TSYs, down $10BN from the current week since the Fed can’t buy bonds on Labor Day.
Here is the full schedule of Treasury purchases for the week ahead.
Curiously, unlike recent weeks when the weekly POMO peaked on Tuesday (as we showed last week), this week the