The Fed Is Buying Fewer Mortgage Bonds This Week (Sort Of…)

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Posted To: MBS Commentary

Here is this week's MBS buying calendar . It differs from last week's in that there is now only $40bln of purchases per day rather than $50bln. So does that mean MBS prices are doomed? Not even a little bit. In fact, the number is still so high as to defy logic. After all, if we add up all the Fed's accepted MBS bids this week, the grand total is roughly $183,307,000,000 or about $36.66 bln per day. Given that the Fed just drove the price of UMBS 2.5 coupons up to 104-15 by Friday afternoon–a delta of more than 6 points from the lows seen at in the previous week–one might expect them to modulate the throttle a bit more. But to the Fed's way of thinking, they're doing their job by controlling volatility and making sure every last seller has a buyer. The margin call side…(read more)

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