September Fiscal Injection and FY Close

FY 2013 Fiscal Injection

Month	Total_Withdrawals_TGA	Pub_Debt_Redemption	Net_Withdrawals_TGA
oct	933	589	344
nov	1035	643	392
dec	947	651	296
jan	969	643	326
feb	992	549	443
mar	888	511	377
apr	1121	751	370
may (adjusted)	1084	717	367
june	800	505	295
july	933	615	318
aug (adjusted)	962	607	355
sept  (adjusted)	1075	748	327
FYTD			4210

September (and FY 2013) is now in the books.

September closed fairly strong with a $327B injection which is an increase over last September (2012) of over $30B, and is a fairly strong seasonal number for a quarter end month where there is no interest paid on US Treasury securities.

We can see that it is in excess of $30B above this past quarter-end month of June where that month was seriously effected by the advent of the "sequester" spending slowdown which started at the end of May and continued through about mid-August; with a subsequent recovery in the injections in late August and through September to close out the FY.

The month also featured a new high in the equity indexes on the back of this recovery in fiscal injections this month and beginning in late August.

October was looking encouraging based on this trailing 6-week trend and with Treasury getting "a new set of books" for FY 2014, but now all of this is in jeopardy due to the current fiscal moron-fest being foisted upon us by our elected officials most if not all who are still believing that "we are out of money" and/or "we are borrowing from the Chinese".

Pretty bad.

Our Tom posted up some intel out of the budget negotiation proceedings where earlier this week there was a Democratic proposal for a continuing resolution on discretionary spending of only a $986B annual rate, which by my estimation will result in a reduction in fiscal injection of nearly $20B/mo. cet par under what we have been lately experiencing; or over a $200B annual reduction in discretionary spending.

Detectable system liquidations seem to be occurring at/around the $300B per month threshold.

We have to wait and see where the data comes in as this month goes on, but right now, based on previous trend data, we are projecting October to come in at about $325B which has been a monthly level that has been shown to be high enough to avoid significant liquidation and perhaps even support some accumulation.

But again, we don't know at this point if a CR will be passed that implements significant reductions in these flows ex ante, which will result in injections well below our projections based on our ex post short term trend data.

This is a very dynamic situation that we will monitor throughout the month and I will make some periodic reports here based on what we begin to see as October progresses.

Hang in there everyone...