Ireland is set to release official cost estimates for the bailout of Anglo Irish Bank on Thursday this week. It will also be a busy day in the US, as the 3rd and final 2Q GDP estimate is due (expected to be unchanged at 1.6%), along with Chicago PMI, and Jobless Claims data.
Earlier this week Moody's lowered their credit rating 3 notches on some of Anglo Irish's debt to one rating above junk status. There is no reason to believe that the cost of AI will be less than the original estimates.
Not to worry however, should there be any resulting weakness in the Euro/strength in the $, it will be offset by the FRBNY's Thursday POMO. Today's POMO managed to lift the Dow 40-odd points as we head into the close on a terrible Philly Fed #, a huge Consumer Sentiment miss, and an in-line but disappointing Case-Shiller home price index.
The total POMO today was a $550M TIPS purchase. This is the smallest POMO of September (possibly also b/c this was a TIPS purchase rather than a Coupon Purchase.) Last week's POMO came in at $11.15B, the prior week's at $8.669B, and the week of September 6th at $4.058B. The average weekly POMO in September has been $7.959B. Given that we've only seen $550M this week, and given the slew of potentially disruptive data on Thursday, which is not incidentally the last day of the quarter, should we expect a record $7B+ in POMO on Thursday???
Total POMO for the month of September (with one operation remaining): $25.327B
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