China’s mortgage bond sales probably led agency drop

A record tumble in the holdings of U.S. agency debt and government-backed mortgage bonds by central banks and similar foreign investors probably reflected sales of home-loan securities by China, according to Wrightson ICAP LLC. The amount of debt, including notes that fund government- supported mortgage financier Fannie Mae, held by official foreign investors plunged $57 billion in the week ended Sept. 15 to $752.5 billion, according to Federal Reserve data. The category also encompasses mortgage-backed securities, or MBS, backed by loans on U.S. houses and condominiums. “Our guess is that the steep slide in that week reflects the settlement of forward sales of MBS that had taken place over the course of the previous month,” Lou Crandall, chief economist at Wrightson in Jersey City, New Jersey, said today in a note to clients. Selling began “just after discussions of the possibility of a government-assisted refi wave began to surface this summer.”

Most Popular Articles

3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please