MBS Week Ahead: Is The Fed Really Buying Less Mortgage Debt This Week?
Posted To: MBS Commentary
Here's this week's Fed MBS Purchase Schedule . The daily amount is down from a recent peak of $50 bln to $25 bln . So does that mean the Fed is only going to buy half as much MBS as it was buying 2 weeks ago? And if so, why aren't prices tanking? It's important to keep in mind that the Fed's announced buying targets are just that: targets. For instance, when the target was $50bln / day, they only bought $36.6 billion / day on average. They lowered the target to $40 bln for Monday, March 30th and only manged to purchase just over $20bln that day. Incidentally, MBS sellers were lined up and waiting to offload that $40bln! When the Fed only showed up for $20bln, prices quickly tumbled (which is exactly what many a mortgage company had been clamoring for due to margin calls…(read more)