Federal Reserve Reveals $1.5 Trillion in Capital Injections to Fight Coronavirus Impact

Posted on 03/12/2020


The Federal Reserve Bank of New York will begin injecting fresh capital to money markets on March 12, 2020 to buffer against coronavirus risks and ease stresses on the Treasury-bill market.

PRESS RELEASE from Federal Reserve Bank of New York

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OPERATING POLICY
Statement Regarding Treasury Reserve Management Purchases and Repurchase Operations – March 12, 2020

The Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York has released a new monthly schedule of Treasury securities operations and has updated the current monthly schedule of repurchase agreement (repo) operations. Pursuant to instruction from the Chair in consultation with the FOMC, adjustments have been made to these schedules to address temporary disruptions in Treasury financing markets. The Treasury securities operation schedule includes a change in the maturity composition of purchases to support functioning in the market for U.S. Treasury securities. Term repo operations in large size have been added to enhance functioning of secured U.S. dollar funding markets.

As a part of its $60 billion reserve management purchases for the monthly period beginning March 13, 2020 and continuing through April 13, 2020, the Desk will conduct purchases across a range of maturities to roughly match the maturity composition of Treasury securities outstanding. Specifically, the Desk plans to distribute reserve management purchases across eleven sectors, including nominal coupons, bills, Treasury Inflation-Protected Securities, and Floating Rate Notes. The distribution of purchases across sectors will be the same distribution as the Desk uses to reinvest principal payments from the Federal Reserve’s holdings of agency debt and agency MBS in Treasury securities. The first such purchases will begin tomorrow, March 13, 2020.
Today, March 12, 2020, the Desk will offer $500 billion in a three-month repo operation at 1:30 pm ET that will settle on March 13, 2020. Tomorrow, the Desk will further offer $500 billion in a three-month repo operation and $500 billion in a one-month repo operation for same day settlement. Three-month and one-month repo operations for $500 billion will be offered on a weekly basis for the remainder of the monthly schedule. The Desk will continue to offer at least $175 billion in daily overnight repo operations and at least $45 billion in two-week term repo operations twice per week over this period.

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Operational Details from FRBNY

“Treasury Securities Operational Details
The New York Fed purchases Treasury securities in order to maintain ample reserve balances in the system and to reinvest principal payments from agency debt and agency mortgage-backed securities (MBS) held in the System Open Market Account (SOMA), as directed by the Federal Open Market Committee (FOMC). These purchases are conducted in the secondary market for Treasury securities.

Planned Purchase Amounts and Schedules
The Desk’s planned monthly purchase amounts are shown in the table below. Effective October 2019, the amounts listed include reserve management purchases and reinvestment purchases of Treasury securities. Details are outlined in a recent operating policy statement and FAQs.

On or around the ninth business day of each month, the Desk will announce the planned purchase amount and release a tentative schedule of operations for the monthly period. The current schedule as well as past schedules can be found below.”

OPERATION DATE OPERATION TIME (EST) SETTLEMENT DATE OPERATION TYPE** SECURITY TYPE AND MATURITY MATURITY RANGE MAXIMUM PURCHASE SIZE
3/13/2020 10:30 3/16/2020 Outright Purchase Treasury Coupons 6/14/2022 – 3/13/2023 $6.425 billion
  11:00 a.m.     2.25 to 3    
3/13/2020 1:30 3/16/2020 Outright Purchase Treasury Coupons 3/14/2023 – 9/13/2024 $8.825 billion
  2:00 p.m.     3 to 4.5    
3/16/2020 10:30 3/17/2020 Outright Purchase TIPS 3/17/2021 – 9/16/2027 $1.625 billion
  11:00 a.m.     1 to 7.5    
3/16/2020 1:30 3/17/2020 Outright Purchase Treasury Coupons 9/17/2021 – 6/16/2022 $7.225 billion
  2:00 p.m.     1.5 to 2.25    
3/17/2020 10:30 3/18/2020 Outright Purchase Treasury Coupons 3/18/2040 – 3/17/2050 $2.225 billion
  11:00 a.m.     20 to 30    
3/19/2020 10:30 3/20/2020 Outright Purchase Treasury Coupons 12/20/2020 – 9/19/2021 $7.225 billion
  11:00 a.m.     0.75 to 1.5    
3/19/2020 1:30 3/20/2020 Outright Purchase Treasury Bills 3/20/2020 – 3/19/2021 $6.025 billion
  2:00 p.m.     0* to 1    
3/20/2020 10:30 3/23/2020 Outright Purchase Treasury Coupons 3/21/2027 – 3/20/2040 $2.825 billion
  11:00 a.m.     7 to 20    
3/23/2020 10:30 3/24/2020 Outright Purchase TIPS 9/24/2027 – 3/23/2050 $1.625 billion
  11:00 a.m.     7.5 to 30    
3/24/2020 10:30 3/25/2020 Outright Purchase Treasury Coupons 3/25/2040 – 3/24/2050 $2.225 billion
  11:00 a.m.     20 to 30    
3/25/2020 10:30 3/26/2020 Outright Purchase Treasury Coupons 3/26/2020 – 12/25/2020 $6.425 billion
  11:00 a.m.     0* to 0.75    
3/26/2020 10:30 3/27/2020 Outright Purchase TIPS 3/27/2021 – 9/26/2027 $1.625 billion
  11:00 a.m.     1 to 7.5    
3/27/2020 10:30 3/30/2020 Outright Purchase Treasury Coupons 9/28/2024 – 3/27/2027 $4.825 billion
  11:00 a.m.     4.5 to 7    
3/27/2020 1:30 3/30/2020 Outright Purchase Treasury FRNs 3/30/2020 – 3/27/2022 $0.550 billion
  2:00 p.m.     0* to 2    
3/30/2020 10:30 3/31/2020 Outright Purchase TIPS 9/30/2027 – 3/30/2050 $1.625 billion
  11:00 a.m.     7.5 to 30    
3/31/2020 10:30 4/1/2020 Outright Purchase Treasury Coupons 4/1/2040 – 3/31/2050 $2.225 billion
  11:00 a.m.     20 to 30    
4/1/2020 10:30 4/2/2020 Outright Purchase Treasury FRNs 4/2/2020 – 4/1/2022 $0.550 billion
  11:00 a.m.     0* to 2    
4/2/2020 10:30 4/3/2020 Outright Purchase Treasury Coupons 4/3/2027 – 4/2/2040 $2.825 billion
  11:00 a.m.     7 to 20    
4/6/2020 10:30 4/7/2020 Outright Purchase Treasury Coupons 10/7/2024 – 4/6/2027 $4.825 billion
  11:00 a.m.     4.5 to 7    
4/7/2020 10:30 4/8/2020 Outright Purchase Treasury Coupons 4/8/2040 – 4/7/2050 $2.225 billion
  11:00 a.m.     20 to 30    
4/8/2020 10:30 4/9/2020 Outright Purchase Treasury Bills 4/9/2020 – 4/8/2021 $6.025 billion
  11:00 a.m.     0* to 1    
4/9/2020 10:30 4/13/2020 Outright Purchase Treasury FRNs 4/10/2020 – 4/9/2022 $0.550 billion
  11:00 a.m.     0* to 2  

*The Desk will not purchase securities with 4 weeks or less to maturity.
**Outright purchases for the current monthly period include approximately $20.0 billion in reinvestment purchases and approximately $60.0 billion in reserve management purchases.

Keywords: Federal Reserve System.

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