MBS Week Ahead: Running Out of Superlatives to Describe Fed’s Fury and MBS Volatility

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Posted To: MBS Commentary

There was a time when several billion dollars a day of Fed MBS purchases was considered a lot. Then the Fed's coronavirus response happened. The Fed didn't like what it saw on Wednesday and Thursday. The already huge $5bln / day in MBS wasn't enough to prevent prices from tanking. So on Thursday, they decided to bring out bigger guns by announcing an extra $10bln in bond purchases. That easily made Thursday the biggest day ever ($15bln) . Despite the big guns, MBS simply doubled down on volatility and eventually ended up as the single most volatile day in the history of the secondary mortgage market. Part of the reason was a late day announcement from the Fed about the following day's plans. In addition to the $2.5 bln on the calendar, they would be adding another $32 bln! This…(read more)

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