• Fed MBS Purchases 99% Complete as the Program Winds Down
• Fed MBS Purchases 99.5% Complete With Another $8bn
• Fed Completes $1.25trn of Agency MBS Purchases
• Mortgage Modifications Create Cash for Agency MBS Reinvestments
• Fed Buys Another $16Bn of Agency MBS

The New York Federal Reserve Bank bought another $10bn of agency mortgage-backed securities (MBS) in the week ending March 10 as the $1.25trn program, now 98% complete, winds down to a close.

The Fed bought $29.4bn gross of MBS — $4.4bn Freddie Mac (FRE: 0.00 N/A) MBS, $25bn Fannie Mae (FNM: 0.00 N/A) MBS, and no Ginnie Mae MBS. After reporting $19.4bn of MBS sales through the same week, the Fed's net purchases came to $10bn, level with last week's agency MBS buys.

The latest weekly figures bring total net purchases to date to nearly $1.23trn — or 98% of the Federal Reserve's $1.25trn purchasing power, according to weekly research by Matthew Jozoff on the JP Morgan Securities MBS strategy team:

The Fed has $24bn left to spend under the program and two weeks of purchase reports before the scheduled completion at the end of March.

The Fed is considering extending and expanding asset-purchase programs, including the MBS program, if its exit this quarter is not replaced with private investor demand, causing MBS spreads to treasuries to blow out again. Bond dealers see positive signs that high prepay speeds in the midst of delinquent loan buyouts by the agencies are also keeping spreads tight, as bondholders reinvest in Fannie and Freddie collateral.

Despite uncertainty in the industry over what awaits the agency MBS market after the Fed exits MBS, plans continue for winding down not only the purchases, also but the large volume of reserves and MBS held by the federal banking system.

Write to Diana Golobay.

Disclosure: The author holds no relevant investment positions.