Caveat Ursi 3.0

As you are probably aware I have long been keen on learning more about the inner workings pertaining to the NY Fed’s repo auctions and I have occasionally reported on the slosh available to preferred primary dealers. After a very pertinent article posted by ZH earlier this week I carefully combed through the recent POMO calendar, which due their traditional rarity I had foolishly ignored for several months now, and to my surprise arrived at highly interesting results:

Coincidence? You be the judge of that – I however took the liberty to highlight and mark each day a POMO operation was held. Quoting the article:

[Permanent Open Market Operations] are conducted from about 10:30am to 11:00am on pre-announced days. In such auctions, the FRNY permanently purchases Treasury securities from selected dealers, with the total purchase amount for a day ranging from about $1.5 B to $7.5B. These days are highly correlated with paint-the-tape closes, with the theory being that the large institutions that receive capital injections are able to leverage this money by 100 to 500 times and then use it to ramp equities.

Here is the current tentative treasury operation schedule (i.e. POMO auctions):

Please note that the next two operations (auctions) are scheduled for tomorrow and Thursday. I am not hundred percent sure that this schedule only refers to POMO auctions – if someone in the know could confirm this I’d appreciate it.

If we get a gap to the downside in the morning I suggest you use it to close your short and grab long positions. I usually get an email after the completion of the auction – if the operation has been postponed I will report it here immediately.