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I was talking about this with a friend today. I think if the Fed announced they were selling agency MBS as part of their QT program we would see a paradigm shi
by anm89 4y ago
I was talking about this with a friend today.
I think if the Fed announced they were selling agency MBS as part of their QT program we would see a paradigm shift in markets. Like limit down kind of days. I think that's what the punch bowl being taken away truly looks like.
And if the S&P down 35% doesn't get inflation down, then I think that's probably next on the list.
- m348e912 4y agoJust curious, how does the Fed selling Freddie Mac and Fannie Mae/Ginny Mae mortgage backed securities cause a shift in the markets? What's the likelihood the Fed would actually do something like that?
- anm89 4y agoIt's basically trying to kill housing demand via interest rates. Selling MBS is a much more direct effect on mortgage rates than something like the fed funds rate
- camnora 4y agoAn increase of MBS offered on the market will cause mortgage rates to rise because there's too many loans for sale and not enough buyers. Buyers will demand higher and higher rates to make it worth their while.
- m348e912 4y agoSomeone/something has to be buying the MBSs today, wouldn't selling them on the market just increase potential buyers? Sorry that I'm not following.