Treasury Auction Watch: New York Fed Open Market Operation for 7/31/2009

Friday, July 31, 2009

New York Fed Open Market Operation for 7/31/2009

As part of permanent Open Market Operations (OMO), the New York Fed purchased agency bonds today:

Operation type: Outright Agency Coupon Purchase
Total Par Amt Accepted: $2,151 million
Total Par Amt Submitted: $4,302 million
Maturity Date Range: 08/14/2013 - 01/19/2016

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In the month of July 2009, the New York Fed purchased:

$28,494 million Treasury securities;
$10,434 million agency bonds;
$80,495 million agency Mortgage Backed Securities (MBS).
Total OMO: $119,423 million

(Source: New York Fed Open Market Operations)

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Terminology
SOMA	System Open Market Account at the Federal Reserve New York Bank
Primary Dealer	A bank or securities broker-dealer that may trade directly with the Federal Reserve System. Primary Dealers are required to bid at Treasury auctions. Current list of Primary Dealers is available at New york Fed.
Indirect Bidder	Supposed to be the foreign investors, both foreign central banks and foreign private investors
Bid to Cover ratio	The number of bids received divided by the number of bids accepted. The higher the ratio, the higher the demand.
Reopening	The U.S. Treasury issues additional amounts of a previously issued security. The reopened security has the same maturity date and coupon interest rate as the original security, but with a different issue date and usually a different purchase price.
Cash Management Bill (CMB)	A short-term security sold by the U.S. Department of the Treasury. The maturity on a CMB can range from a few days to six months. The money raised through these issues is used by the Treasury to meet any temporary shortfalls. CMBs tend to pay higher yields than bills with fixed maturities, but their shorter maturities lead to lower overall interest expense.
Supplementary Financing Program (SFP)	A program initiated by the U.S. Treasury Department at the request of the Federal Reserve in September 17, 2008. The cash raised from the auction will be used in the various Federal Reserve initiatives to support the financial markets and manage its balance sheet.

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