so as not to lose sight of it, alea
observes the declining excess reserves in the banking system, a function of unwinding fed assets (such as currency swaps or term auction credit) outpacing the portfolio accumulation (ie, monetization) of treasuries and MBS. in the comments, i speculated on the association between temporary open market operations (effectively the term auction facility, or TAF) and liquidity available to the financial system as a driver for market prices. the slosh report
is an easy place to view the trend in TOMO/TAF (the "slosh"); another is the FRED graph. jck is as always gracious.
Labels: economics, markets