4 ms·

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 bu

by 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
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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/