4 ms·

Ironically it doesn't mention the elephant in the room. US Fed is now funding T2.6$ worth of mortgages [1]. US Fed began purchasing RMBS assets (essentially mor

Ironically it doesn't mention the elephant in the room. US Fed is now funding T2.6$ worth of mortgages [1]. US Fed began purchasing RMBS assets (essentially mortgages) in order to support the housing market as one of its responses to 2008 crisis [2]. It was meant to be a stop-gap measure, but it hasn't ended. BTW this is a good overview of different parties involved in the mortgage supply-chain https://imgur.com/NYg7G4t https://imgur.com/NYg7G4t [1] https://fred.stlouisfed.org/series/WSHOMCB https://fred.stlouisfed.org/series/WSHOMCB [2] https://www.newyorkfed.org/markets/mbs_faq.html https://www.newyorkfed.org/markets/mbs_faq.html

csense 5y ago
Thanks for mentioning this. I somehow didn't quite realize MBS purchases had resumed with the Fed's COVID response, for some reason I assumed they were only buying Treasuries. Even though I've been trying to keep up with the Fed's activities, somehow I missed the part about current-decade MBS purchases (and it's a big part).
- deleted 5y ago
  [deleted]
- cavisne 5y ago
  Wait till you find out the Fed buys corporate bond ETF's nowdays too...
  - quickthrowman 5y ago
    Their reasoning was sound (liquidity mismatch), but I hope it stops there and doesn’t continue into buying equities like the Bank of Japan. More about why the Fed stepped into the corporate bond market to provide liquidity in 2020: https://www.brookings.edu/wp-content/uploads/2020/10/wp69-liang_1.pdf https://www.brookings.edu/wp-content/uploads/2020/10/wp69-li...
  - pgwhalen 5y ago
    It's worth pointing out that the Secondary Market Corporate Credit Facility has ended, and the Fed has sold everything it has bought [0]. But of course the precedent has been set, which may be why you chose to use the present tense. [0] https://fred.stlouisfed.org/series/H41RESPPAABNWW https://fred.stlouisfed.org/series/H41RESPPAABNWW
- vishnugupta 5y ago
  You're welcome! If you are a numbers person I found H.4.1 weekly data release to be very useful [1]. It is reasonably accessible to non-expert like me so I dig into it once in a while. The line item of interest here is "Mortgage-backed securities". As you can see from Jan 6th release; Fed funded B576$ worth of mortgages in 2021 alone. I read remember reading somewhere that Fed now holds 1/3rd of all the mortgages. Can't dig up the source now. [1] https://www.federalreserve.gov/releases/h41/20220106/ https://www.federalreserve.gov/releases/h41/20220106/
cedws 5y ago
Seems like if the economy were a bridge then it would be held together with blue tack and bubblegum at this point.
jevoten 5y ago
> to support the housing market I.e. to keep housing prices high?

csense 5y ago

Thanks for mentioning this. I somehow didn't quite realize MBS purchases had resumed with the Fed's COVID response, for some reason I assumed they were only buying Treasuries. Even though I've been trying to keep up with the Fed's activities, somehow I missed the part about current-decade MBS purchases (and it's a big part).

deleted 5y ago
[deleted]
cavisne 5y ago
Wait till you find out the Fed buys corporate bond ETF's nowdays too...
- quickthrowman 5y ago
  Their reasoning was sound (liquidity mismatch), but I hope it stops there and doesn’t continue into buying equities like the Bank of Japan. More about why the Fed stepped into the corporate bond market to provide liquidity in 2020: https://www.brookings.edu/wp-content/uploads/2020/10/wp69-liang_1.pdf https://www.brookings.edu/wp-content/uploads/2020/10/wp69-li...
- pgwhalen 5y ago
  It's worth pointing out that the Secondary Market Corporate Credit Facility has ended, and the Fed has sold everything it has bought [0]. But of course the precedent has been set, which may be why you chose to use the present tense. [0] https://fred.stlouisfed.org/series/H41RESPPAABNWW https://fred.stlouisfed.org/series/H41RESPPAABNWW
vishnugupta 5y ago
You're welcome! If you are a numbers person I found H.4.1 weekly data release to be very useful [1]. It is reasonably accessible to non-expert like me so I dig into it once in a while. The line item of interest here is "Mortgage-backed securities". As you can see from Jan 6th release; Fed funded B576$ worth of mortgages in 2021 alone. I read remember reading somewhere that Fed now holds 1/3rd of all the mortgages. Can't dig up the source now. [1] https://www.federalreserve.gov/releases/h41/20220106/ https://www.federalreserve.gov/releases/h41/20220106/

cedws 5y ago

Seems like if the economy were a bridge then it would be held together with blue tack and bubblegum at this point.

jevoten 5y ago

> to support the housing market I.e. to keep housing prices high?