Yields Hit Session High After Fed Cuts Treasury QE To Just $7 Billion Per Day

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 three weeks ago was again cut in half to $15 billion per day. Then, two weeks ago the Fed again slashed its daily POMO by another 33%, to $10BN per day, before cutting it to $8 billion last week. Fast forward to today when, in its latest just published schedule, the Fed unveiled that in the coming week it would purchase "only" $7BN per day.

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Contrary to some expectations that the Fed would only announce a month POMO total, 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 $35BN in TSYs, down $5BN from the current week.

Here is the full schedule of Treasury purchases for the week ahead. Note the increasing divergence between some days of the week, such as the $4.5BN in POMO on Monday vs the $13BN on Tuesday.

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Additionally, the Fed will also taper its MBS buying from $6 billion to $5 billion on average in MBS per day next week:

• Mon: $5,083BN from $6.16Bn last Monday
• Tue: $4.875BN from $5.76BN last Tuesday
• Wed: $5.083BN from $6.16BN last Wednesday
• Thur: $4.875BN from $5.76BN last Thursday
• Fri: $5.0833BN from $6.16 last Friday

The chart below summarizes all the Fed Treasury and MBS buying completed and scheduled since the relaunch of QE on March 13:

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So, in aggregate, the Fed will buy a total of $60 billion of MBS/TSYs next week, down from $70 billion but still more on a weekly basis than the largest QE programs monthly totals before this crisis, if well below the $625 billion in purchases conducted in the week starting March 23, when the financial system was once again on the verge of collapse due to a decade of ruinous Fed policies... and only the Fed could bail it out.