Fed MBS Purchases 99.5% Complete With Another $8bn
The New York Federal Reserve Bank bought another $8bn of agency mortgage-backed securities (MBS) in the week ending March 24. The purchasing program, now 99.5% complete, will wind by the end of the month. The Fed bought a total $8.26bn of MBS this week -- $3.6bn of Freddie Mac (FRE) MBS, $4.1bn of Fannie Mae (FNM) MBS and $560m of Ginnie Mae MBS. The Fed also reported $260m of MBS sales in the same week, bringing net purchases to $8bn. It marks a slow-down from $10bn last week. The latest week of reporting brings the Fed's net purchases to date up to more than $1.24trn, or 99.5% of the program's $1.25trn purchasing power, according to weekly research by the JPMorgan (JPM) MBS strategy team. The weekly purchases have for months represented a significant demand for the gross amount of agency MBS purchases: The Fed has $6.07bn left to spend under the program. The Federal Reserve last week decided to exit the program at the end of March, despite earlier consideration of a possible expansion and extension of government-led initiatives to buy MBS. The Fed’s exit from agency MBS has sparked investor fears MBS bond yield spreads to Treasurys may blow out again from recent historic tights, when the government withdraws its significant demand for securities. Write to Diana Golobay. Disclosure: The author holds no relevant investment positions.