FED: VENDER ATIVOS É UMA OPÇÃO?

09:21 MNI: INSIGHT: FED MAY SELL ASSETS IF OTHER TOOLS PROVE INADEQUATE

Sales of longer term securities from the Federal Reserve's vast portfolio are not part of the Fed's monetary policy "normalization" plans, but they haven't been ruled out.

If the Fed's first-line monetary control tools fail to lift short-term interest rates in a dependable, predictable manner, it is prepared to resort to other fall-back measures, including asset sales, MNI understands.

Asset sales are something most Fed policymakers would like to avoid, as was made clear when the Federal Open Market Committee published a statement of "policy normalization principles and plans" on Sept. 17.

To the surprise of few, the FOMC decided to focus primarily on raising short-term interest rates rather than on reducing the bloated Fed balance sheet as it gradually removes the aggressive monetary accommodation it has put

in place since the financial crisis.

The normalization process will not begin at all until there is a high Level of confidence that the economy is sustainably growing rapidly enough to make further progress on eliminating labor market slack and bringing inflation up

to the 2% target.

But when the time for "lift-off" does arrive, the FOMC's main policy instrument will be raising its policy rate, the federal funds rate, from Near zero where it has been since December 2008. The plan is to keep targeting a 25

basis point funds rate range, rather than a specific point rate.

When the time comes to raise the funds rate target range from the zero to 25 basis points to, presumably, 25 to 50 basis points, the FOMC plans to keep it within the new range by deploying two main Tools.

It plans to set a ceiling for the funds rate by raising the interest on excess reserves (IOER) rate, from the current 25 basis points. And it hopes to set a floor under the funds rate with its rate on overnight fixed rate reverse

repurchase agreements.

Unlike the IOER, which is restricted to depository institutions, the ON RRP facility is open to a much wider array of counterparties, including government sponsored enterprises (GSEs) and money market funds. They can get a

guaranteed overnight return by purchasing Treasury securities from the Fed - essentially lending it money - and selling it back to the the Fed the next day at a lower, preset price.

Under the latest ON RRP terms, any eligible counterparty can bid up to $30 billion per day, with an aggregate cap of $300 billion on each operation.

The ON RRP rate is now 5 basis points.

At "lift-off," the Fed would likely raise the IOER rate to 50 basis points and the ON RRP rate to 30 basis points.

This "corridor" rate scheme, it is hoped, will enable the Fed to exert "monetary control" over its targeted policy rate, the federal funds rate and in turn other money market rates, despite some $2.7 trillion in bank reserves

overhanging the money market and exerting downward pressure on short-term rates.

By targeting a range, rather than a rate point, the FOMC is acknowledging there will probably be more fluctuation in the funds rate than typically existed before the crisis led the FOMC into three rounds of large-scale asset

purchases that quintupled the Fed balance sheet to $4.5 trillion.

If the funds rate can be kept within a 25 basis point band except for occasional quarter-end or year-end divergences, most Fed officials will feel they have largely accomplished their mission.

But what if the IOER and the ON RRP rates do not confine the funds rate within a 25 basis point range as well as hoped? What if the funds rate trades more frequently outside of the range?

Specifically - and this is the greatest fear - what if the Fed needs to raise rates and tighten credit to curtail either inflation pressures or financial instability but finds itself unable to effectively raise the funds rate, and in turn the

repo rate and other short-term rates?

What if the funds rate trades frequently or consistently below the would-be ON RRP floor?

Although Fed officials speak confidently about the effectiveness of their tools, they are aware of that possibility and have been brainstorming work-arounds - other tools, other options for the use of existing tools and, yes,

potential asset sales.

Some supplemental tools are already on the shelf that go beyond strictly controlling interest rates to managing the supply of reserves in support of higher rates.

The Fed can, for instance, drain reserves through the use of more traditional term (as opposed to overnight) reverse repurchase agreements, in which a financial institution buys a security from the Fed's portfolio and sells it

back some days later at a higher price, earning a return on the difference.

Term reverse repos can be rolled over repeatedly to effectively reduce reserve balances and relieve downward pressure on rates.

The Fed has also been testing a Term Deposit Facility, which enables the Fed to drain reserves by letting banks invest reserves at a slightly higher rate than the IOER (now 26 basis points) for seven days.

TDF demand has been constrained by banks' reluctance to tie up funds for a full week. So the Fed is about to start testing TDF offerings with an early withdrawal feature. It could also increase the attractiveness of the TDF by

increasing rates and/or bid amounts.

While the FOMC has eschewed, at least initially, asset sales to actively shrink the balance sheet and reserves it does plan to passively shrink them by ceasing to reinvest principal payments from its holdings of agency debt and

agency mortgage-backed securities in agency mortgage-backed securities and ceasing to roll over maturing Treasury securities at auction.

The FOMC announced on Sept. 17 the discontinuation of reinvestments and rollovers would not begin until after the first rate hike.

Reinvestment may be "tapered," rather than ended abruptly. Either way, it would tend to relieve downward pressure on money market rates by erasing some of the voluminous reserves in the system, make the corridor work

better and strengthen monetary control.

However, the cessation of Treasury reinvestments or rollovers will likely have only a modest impact at first. This is because the Fed sold virtually All of its shorter term Treasury securities while buying longer term securities as

part of its Maturity Extension Program.

The initially $400 billion "Operation Twist" began in September 2011 and was extended in June of the following year through the end of 2012. Altogether MEP sales totalled nearly $634 billion. As a result very few Treasury

notes and bonds mature in 2014 and 2015.

Not until 2016 do Treasury securities begin maturing in large amounts - $36.7 billion in February alone.

Some combination of the IOER, ON RRP, TDF, term reverse repos and ceasing reinvestment, it is hoped, will enable the Fed to raise the funds rate and keep it within range most of the time.

Still other wrinkles could be explored, such as further adjustments to the ON RRP rates and terms and a broader definition of the federal funds rate.

But the Fed is prepared for the possibility that those measures could Fall short.

At that point, it is conceded, the FOMC might have to resort to asset sales.

That is not the current plan. The FOMC confirmed Sept. 17 it "does not anticipate selling agency mortgage-backed securities as part of the normalization process."

The FOMC only specifically mentioned MBS sales, MNI understands, because in its June 2011 exit principles, it had said "sales of agency securities from the SOMA (system open market account) will likely commence

sometime after the First increase in the target for the federal funds rate."

The FOMC does not plan on selling Treasuries either. But sales of both could be on the table if other tools prove inadequate.

That is not something most officials want to discuss out loud, but last week, asset sales were mentioned by Simon Potter, executive vice president of the Federal Reserve Bank of New York.

"However, if the pressure on market rates from the Fed's administered rates turns out to be insufficient, the Committee has a range of other tools - including term deposits, term RRPs, and asset sales - that could be used to

help tighten the stance of policy," said Potter who runs the New York Fed's open market trading desk.

In late September, Cleveland Fed President Loretta Mester said, "I do not view asset sales as a necessary tool for controlling interest rates. But Once normalization is underway, I would be open to considering a gradual path of

asset sales over time as a way to return the balance sheet more quickly to the more normal size and composition we anticipate it to have over the longer run."

It is known that a willingness to sell assets, however reluctantly, is shared by other Fed officials.

If the Fed is forced to resort to asset sales, it would likely announce that, contingent upon economic and financial conditions, it will reduce its portfolio of Treasuries and/or MBS by so much per month. (Market News

International)

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FED PODERÁ VENDER ATIVOS CASO OUTRAS MEDIDAS SE MOSTREM INADEQUADAS.

A venda dos títulos de longo prazo que compõem seu vasto portfólio não faz parte do plano de política monetária do Federal Reserve (FED) para normalização da economia. Todavia, não é uma opção totalmente descartada.

No entendimento do MNI (Market News International), caso as ferramentas usuais de controle monetário utilizadas pelo FED para elevar as taxas de juros de curto prazo não funcionem de forma confiável, medidas alternativas poderão ser utilizadas, como por exemplo, a venda de ativos.

A venda de ativos é uma ação que os formuladores de políticas do FED gostariam de evitar, como ficou claro quando o Comitê de Mercado Aberto (FOMC) publicou uma declaração de “planos e princípios de política de normalização” em 17 de setembro.

Para a surpresa de alguns, o FOMC decidiu priorizar a elevação de taxas de juros de curto prazo ao invés de eliminar o inchaço no Balanço do FED, diminuindo gradualmente, dessa forma, a agressiva acomodação monetária que colocou em vigor desde a crise financeira.

O processo de normalização só terá início de fato, quando houver confiança de que a economia está crescendo de forma rápida e sustentável, o suficiente para eliminar a folga existente no mercado de trabalho e elevar a inflação para a meta de 2%.

Quando chegar a hora, o principal instrumento do FOMC será elevar as taxas dos fundos federais dos atuais quase zero onde permanecem desde dezembro de 2008. O plano é estabelecer como meta um intervalo de 25 pontos-base para taxa e não um valor específico.

No momento de elevar a meta do intervalo atual de taxas, zero a 25 pontos, para prováveis 25 a 50 pontos, duas principais ferramentas serão utilizadas.

O plano é elevar o teto da taxa de juros dos fundos federais, atualmente em 25 pontos-base, por meio do aumento dos juros sobre as reservas excedentes (IOER). Estabelecendo também, um piso para as taxas dos fundos baseado nas taxas fixadas em operações de overnight com compromisso de recompra reversa.

Ao contrário da IOER que é restrita à determinadas instituições financeiras, as operações de Open Market conhecidas como ON RRP ( compromisso de recompra reversa) são permitidas a uma variedade maior de contrapartes, incluindo as GSE’s (empresas privadas contratadas pelo governo para prestação de serviços públicos) e a fundos mútuos de investimentos (tipo MMF), que ao comprar títulos federais, têm garantido um retorno diário – na prática um empréstimo com o compromisso de que o título será recomprado pelo governo no dia seguinte por um preço pré-definido.

Pelas regras atuais, a contraparte pode oferecer até 30 bi de dólares por dia, sendo o valor agregado máximo permitido de 300 bi em cada operação.

Atualmente a taxa das ON RRP está em 5 pontos-base.

A intenção do FED é elevar para 50 pontos-base a taxa para a IOER e para 30 pontos-base a taxa das ON RRP.

Com tal esquema, o FED espera conseguir exercer controle monetário sobre a taxa diretora que é a dos fundos federais e por conseguinte em outras taxas do mercado monetário, apesar dos 2,7 trilhões em reservas bancárias exercendo pressão de baixa nas taxas de curto prazo.

Ao dar preferência a estabelecer um intervalo de taxas e não um valor específico, o FOMC admite que, provavelmente, haverá mais flutuação das taxas dos fundos do que antes da crise que levou a três rodadas de compra de ativos em larga escala e quintuplicou o balanço patrimonial do FED para US$ 4,5 trilhões.

Caso a taxa dos fundos puder ser mantida dentro de 25 pontos-base, excetuando alguns períodos como finais de trimestre ou de ano, a maioria das autoridades do FED sentirá ter atingido plenamente sua missão.

Mas e se o esquema não funcionar e a taxa dos fundos não ficar limitada ao intervalo esperado dos 25 pontos-base? E em caso de as negociações com as taxas dos fundos ocorrerem com frequência fora da faixa desejada?

E se, e este é o maior receio, o FED necessitar elevar as taxas, apertando o crédito para diminuir as pressões inflacionárias e a instabilidade financeira, e ainda assim não for capaz de elevar as taxas dos fundos e consequentemente outras taxas de mercado, inclusive as de curto prazo?

E se as negociações com as taxas dos fundos ocorrerem frequentemente abaixo do limite inferior do intervalo desejado para as ON RRP?

Embora o discurso oficial do FED demonstre confiança nos instrumentos à sua disposição, há consciência das questões levantadas acima e outras linhas alternativas de ação estão sendo preparadas, inclusive a venda de ativos.

Alguns dos instrumentos adicionais já estão prontos para uso e vão além do estrito controle das taxas de juros para gerenciar o aprovisionamento de reservas que permitam a manutenção de altas taxas.

O FED pode, por exemplo, reduzir as reservas utilizando um meio tradicional (oposto ao overnight) como as operações de RRP, nas quais uma instituição financeira compra um título do portfólio do FED e o vende de volta alguns dias depois por um preço maior, lucrando com a diferença.

Tais operações podem ser feitas repetidas vezes para reduzir as reservas e pressionar uma baixa das taxas.

Mas esse não é o plano atual. Em 17 de setembro, o FOMC confirmou que não irá antecipar a venda dos títulos lastreados nas hipotecas dos empréstimos imobiliários (MBS) como parte do processo de normalização.

Tendo o FOMC mencionado apenas as MBS, o MNI baseando-se nos chamados planos estratégicos para normalização datados de junho de 2011, entende que as vendas de títulos oriundos do SOMA(operações de open market) devem ter início em algum momento após a primeira elevação da meta para as taxas dos fundos.

O FOMC não planeja vender Treasuries desde que as ferramentas em uso se mostrem adequadas.

Embora não seja algo que as autoridades queiram alardear, na última semana a venda de ativos foi mencionada por Simon Potter, vice-presidente executivo do FED de Nova York.

“No entanto, se a pressão do FED sobre as taxas, via taxas administradas, não for suficiente, temos uma série de outros instrumentos – incluindo os Termos de Depósito, as RRPs e a venda de ativos – que poderiam ser usados para reorientar a política,” disse Potter que atua na mesa de operações de open market de Nova York.

Em setembro último, a Presidente do FED de Cleveland Loretta Mester disse, “Eu não acho que a venda de ativos seja necessária para controlar as taxas de juros. Mas quando a normalização estiver acontecendo, eu consideraria a venda gradual de ativos como um caminho para devolver mais rapidamente aos balanços o tamanho e composição que julgamos corretos no longo prazo”.

Sabe-se agora que a disposição para vender ativos, embora com certa relutância, é compartilhada por outros presidentes do FED.

Se o FED tiver que recorrer a venda de ativos é provável anunciar que, dadas as condições econômicas e financeiras, irá reduzir mensalmente de seu portfólio os títulos Treasuries e/ou MBS.

(MARKET NEWS INTERNATIONAL)