przycinek.usa
30.06.08, 20:57
Znalazlem dosyc interesujaca wypowiedz w internecie.
Na szczescie tekst jest dosyc latwy, a liczby maja uniwersalna wymowe:
(...)
The first thing to note about the Fed is they don't actually determine
interest rates. They have the ability to set the Fed Funds target rate but
then they have to go out and defend it in the marketplace - just like any
other private entity seeking to set an arbitrary price. The strongest tool
they have in this price-fixing scheme is the aura of omnipotence that they
have acquired over the years so few other players are willing to take them on.
A wise Fed chairman knows this and sets the target close to the market rate to
avoid a test of wills that he might lose - along with his credibility in the
process.
So let's look at the resources they have available to defend their chosen
target rate. The Fed began 2007 with $277 billion in Treasury bills. As of the
August 23 report, that number was unchanged but things began to move quickly
thereafter. From the late summer of last year the Fed reduced its T-bill
holdings by $76.7 billion by the March 6, 2008 report, which works out to
about $12 billion per month. This was accomplished by bills maturing and not
being rolled over as they usually would, which was sufficient to fund the TAF
and discount window lending. Then things changed.
Storm Warning
In March, something really bad was brewing. We would later find out that Bear
Stearns, a major investment bank was in the process of going under. Demand for
Fed loans picked up dramatically and maturing T-bills no longer provided
enough cash to fund the demand. So, for the first time since the crisis began,
the Fed began to sell outstanding Treasury debt from their own inventory in
order to supply the funds for the Primary Dealer Credit Facility (PDCF) which
was introduced in early March:
3/7 - $10 billion sold
3/12 - $15 billion
3/17 - $18 billon
3/19 - $15 billion
3/25 - $12 billion
3/26 - $9 billion
total - $79 billion sold in 3 weeks
Of course, that is in addition to the normal process of runoff as bills
mature. The numbers can be easily confirmed with a search of the NY Fed's
permanent market operations. These actions pushed the 3-month bill's yield
from under 1.0% to 1.4% in a short period. In addition, the Fed also began to
sell off its longer-term Treasury obligations - $35 billion worth in 7
auctions through April 3rd. This pushed the yield on the 10-year (TNX) from
3.3% to 3.6% over that time. They sold another $30 billion in May, helping to
push the yield on the TNX north of 4.0%. These actions account for the entire
12-month decline in longer-term treasuries. I'm virtually certain that the
initial upward push in Treasury rates was welcomed as an "end to fear" and
"return to normalcy" - also helping to push down risk spread by the simple
expedient of increasing the base rate. I doubt that the second surge above 4%
was quite so welcome and a repeat of that right now would be quite a major
problem for the Fed.
The Box
We have now seen that the Fed can move longer-term interest rates if it has
the resources and is willing to suffer the consequences of those actions -
just like any other private bank or bond market player. We also note that
there have been no open market sales of Treasuries since late May and the
accompanying spike in the 10-year rate - critical since standard fixed rate
mortgages are priced off of that rate. Even without selling pressure from the
Fed, the TNX is still hanging out right around 4.0%. The rise above 4.3% must
have scared the Fed to death since they reversed their rhetoric and even
obliquely threatened to raise the Fed Funds target. Another half-point rise in
mortgage rates would be likely to finish off a housing market already on life
support and Bernanke doesn't want that on his record.
The state of the bond market leaves the Fed unable to sell any of its
longer-dated Treasuries without severely damaging consequences. Yet long-dated
securities are essentially all they have left - Treasury notes (2-10 years)
and bonds (30 years) equal $412.4 billion. That compares to only $21.7 billion
of the original $277 billion worth of T-bills. This is all that the Fed can
really use without inflicting damage on the bond market that will be somewhere
between severe and completely counter-productive.(...)
jengafinance.blogspot.com/2008/06/why-bennie-cant-lend.html
