by Dave in Denver:
"I've been arguing for quite some time that the real reason we will see more QE, despite the rhetoric coming from the Fed, for the simple reason that it is the only way for the Treasury to keep funding its rabid debt issuance at the current low rates. As has been widely documented, in 2011 the Fed bought 60% of all new Treasury issuance. As noted by zerohedge, yesterday and today the Fed directly monetized this week's 10-yr and 30-yr Treasury auctions by purchasing an amount equal to 20% of the 10-yr paper sold and 15.4% of the today's 30-yr auctions: 10-yr POMO; 30-yr POMO.
"Just to clarify, the POMO operation by the Fed is a "reverse" auction, in which the Fed solicits Treasury bond offerings from the Wall Street banks. This is paper that comes from each bank's inventory (balance sheet) and purchased by the Fed. ..." click through for the rest.