last week, the fed offered up $75 billion of its treasuries to the dealer community. demand was weak (good news), so the fed cut this week's Term Securities Lending Facility to just $25 billion. the just-released results reflect the following:
1) the collateral submitted was $40 billion less than last week, a sign of reduced liquidity needs
2) given that today's auction was for "Schedule 2" collateral (agency MBS plus private label RMBS, agency CMOs, commercial MBS), which gave dealers a chance to unload securities deemed relatively riskier than Schedule 1 collateral (high-quality paper), yet they did not show an urgency to do so.
3) the rate paid to the fed to obtain securities shows no urgency either