Wednesday, December 22, 2010

POMO Days Are Here Again!

The sun is shining clear again!
We'll sing a song of cheer again!
POMO days are here again!
It's another outright coupon purchase today, looking for securities with a maturity/call date range of 2/15/2021 to 11/15/2027 (i.e. 11 to 17 years). $13,055 billion in assets were submitted to the program, and $2,070 million were purchased. Given the general laws of supply and demand[1], this would have driven prices down, so yields should be up. For these maturity ranges, anyway.
[1] A large supply drives prices down. A scarce supply drives prices up.

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