The Federal Reserve Bank of New York in the week ending January 27th continued to buy mortgage assets from government-sponsored entities as the program winds-down to a close by the end of the quarter. The Fed bought a total of $12.5bn in mortgage-backed securities (MBS) – $5.1bn Freddie Mac (FRE) MBS, $4.7bn Fannie Mae (FNM) MBS and $2.7bn Ginnie Mae MBS, according to a summary of purchases. The New York Fed also sold $500m of MBS in the same week, bringing the net purchases to $12bn, the same as last week. This week’s MBS buys bring net Fed purchases to date to $1.16trn, or nearly 93% of the Fed’s $1.25trn buying power, according to weekly commentary by JP Morgan Securities. Details of the week’s purchases come a day after the Federal Reserve announced following its January meeting that the purchase program is on track for completion by the end of Q110. 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. The Fed’s demand for 30-year securities, for example, represented a significant share of gross issuance throughout 2009, soaring to more than 150% by October before dipping down to under 100% at year-end, according to JP Morgan Securities: JP Morgan Securities recently recommended selling MBS and buying Treasuries ahead of the Fed’s exit from the program. MBS spreads to treasuries is likely to remain tight in the near-term, researchers said, but swaps are currently too narrow to entice private investors. Write to Diana Golobay. Disclosure: The author holds no relevant investment positions.