Following up on its statement concurrent with that of the FOMC on November 3, 2010, the Federal Reserve Bank of New York (FRBNY) has today released its Tentative Outright Treasury Operation Schedule for the following month. The total amount of purchases from its selected primary dealers over the November 12 to December 9, 2010 period will be $105 billion, composed of $75 billion from the new quantitative easing directive (QE2) and $30 billion from so-called QE Lite, which has been ongoing since August 17, 2010.
Though the amounts are within expectations, notable is that the purchases will be conducted nearly every trading day over the one month period except the Wednesday, Thursday and Friday of the US Thanksgiving Holiday week. Upon the following Monday, November 29, 2010, there will be an unprecedented two operations, one in the morning and one in the afternoon.
The purchase schedule is unusual because previously, the FRBNY conducted them only one to three days per week. Purchase schedules for following months will be announced around the eighth business day of each month, continuing until at least the tentative termination date of the program in June, 2011.
Total Treasury debt purchases are estimated by FRBNY to be between $850 and $900 billion, which will account for a $600 billion net increase in the Federal Reserve's balance sheet over the next eight months. However, there is debate over whether the program will be extended. The manager who directs the FRBNY's purchase operations, Brian Sack, gave a speech on October 4, 2010, which outlined the process by which the Federal Reserve would institutionalize its large scale asset purchases to become a permanent monetary management tool. The altered purchase schedule and promise of release of actual purchase prices, also unprecedented, confirms as much.
No comments:
Post a Comment