Fed Buys Another $12bn of Agency MBS
The Federal Reserve Bank of New York bought $12bn of mortgage-backed securities (MBS) from mortgage giants Freddie Mac (FRE), Fannie Mae (FNM) and Ginnie Mae in the week ending January 20. Gross purchases totaled $16.36bn — $1.3bn of Freddie MBS and $12.8bn of Fannie MBS — before $2.25bn of MBS sales during the same time frame, according to details released Thursday by the NY Fed. The week brought the Fed's total net purchases to date to nearly $1.15trn. It’s another week of slowed purchases as the Fed winds down its purchase program, which is on track to buy up $1.25trn of agency MBS by the end of Q110. The week's figures bring total net purchases to date to nearly $1.15trn, according to weekly commentary by JP Morgan Securities. At the same time, according to the data, the agency fixed net issuance of MBS totals $423.51bn. The data from JP Morgan indicates the Fed has just over $100bn left to spend under the $1.25trn program. The Fed has considered 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. Write to Diana Golobay. Disclaimer: the author holds no relevant investment positions.