And This is Why The Primary Dealers Make Billions Risk Free

and at YOUR Expense!

Today's POMO results are in. Last week we had a 7 year note Treasury auction; in that auction, Primary Dealers bought the 7 years,  I think it was 41% of the auction. Not even 3 days later, the Fed has monetized more then half of the PD takedown. These PD's held for about 3 days which equates to about zero risk, and of course the Fed pays them a nice little premium when they take the bonds off the PD's hands and monetize the debt. We have seen this happen many times in the past, usually two weeks has been about the shortest PD hold time before being bought by the Fed, but 3 days? It's free money to the banks/PDs and raises some serious questions about the ethics of this whole process.