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Fed Second Largest Holder Of Us Treasury Bonds


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HOLA441

Oh my

Today's POMO is over: at $2.069 billion, the operation was right in line with our expectations, coming in at a lofty 12.16 submitted to accepted ratio, as investors apparently are not too crazy about the yield perspective of the 4 2013 CUSIPs that were repruchased. However, what is far more important is that with holdings of $821.1 billion, the Fed is now officially the second largest holder of US Treasurys. Next up- China.

While the official breakdown will likely be a few weeks late in coming, here is the math:

Fed holdings as of September 30: $811,669

Add:

* POMO - September 30 (October 1 settlement): $2,200

* POMO - October 5: $5,190

* POMO - October 6: $2,069

Total: $821.128 Billion, which compares to Japan total $821.0 Billion as of July 2010

Congratulations, America: your central bank is just $25 billion away from being the Treasury's largest creditor, and thus able to dominate any and all future debt restructuring negotiations with what is, essentially, itself.

Things might get nasty now.

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HOLA447

The US national debt is approx $13 trillion! So, maybe the Fed is getting close to being the single largest holder but it's still less than $1 trillion, so not a major share of the total debt.

Yes, and it's really meaningless so long as Dollars are still accepted as money.

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HOLA448

 Ultimately the Treasury will end up being the largest holder of Treasury bonds when the final mega auction completely fails.

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