TIPPING POINT...?
Fed and Treasury Daily Update - Tuesday, December 27, 2005
The Fed added $9 billion in 8-day repos and $3.5 billion in overnight repos against no expirations for a net add of $11.5 billion. The 5-day net rose to a $16.5 billion net add. The total liquid assets line went screaming through the top of the one-year channel, to the top of the long term 7.5% growth channel.
If they follow last year's model, they will begin withdrawing liquidity more aggressively immediately after the first of the year. I was premature on
Friday when I wrote, "This should be the zenith ¡V as good as it gets. The market is probably not going to have this much help again for quite a while." In the next week or two we'll see if that statement was just premature, or if the Fed is embarking on a new easier policy path.