8 replies to this topic

[Jnavin]

but...mortgage backed securities. New item:

"The Federal Reserve today added $19 billion to the system through the purchase of mortgage-backed securities, then $16 billion in three-day repurchase agreements. The Fed also added money on Thursday."


Couple of questions:
Has the Fed purchased mortgaged-backed securities before?
And, if so, now often?

Ah. News item is wrong...it's not a "purchase," it's collateral.

Edited by Jnavin, 10 August 2007 - 12:21 PM.

[arbman]

Of course they bought the MBS before...

Just look...

But, they are now buying proportionally a lot more than before...

[Jnavin]

Thanks, kis. I'm wondering how much these mortgage-backed securities are worth? Of course, if the people taking them as collateral also have the power to cut rates, then, at that point, they're worth more, aren't they?

[NAV]

Holy crap ! Money was backed by gold. Then it was the treasuries. Now it's the mortgages.....What next ? Junk ??? Yikes !

[SemiBizz]

Think of it as a sewage spill... they are trying to sop it up before it smells up the place...

[arbman]

Well, there is probably nobody else to buy them, if you think of it... But these are very short term repos, Fed will not lower the rates that soon. This kind of also implies that the Fed will have to lower the rates, if they don't want to take a loss on them, I guess they can also keep rolling them... If anything, the Fed's credibility has been damaged yet one more time --does anyone remember the Maria disaster-- since they bluffed the markets this week with the FOMC statement and downplayed the slow down, pretended that the inflation or too much liquidity was still a concern, the market swiftly rejected their proposition... - kisa

[Jnavin]

Kis, I appreciate your knowledge on this stuff. So, let's see...I'd guess a rate cut is highly probable and soon, say...in September? So, "interest-rate sensitive" might be the area of buying interest right here? Too obvious.

Edited by Jnavin, 10 August 2007 - 12:57 PM.

[arbman]

I don't know much about them, it is all practical knowledge, I don't know how to analyze most of the credit products in depth...

Once there was somebody would update these charts regularly, it was very useful. If anyone knows a link about how to calculate them, I can put together a few spreadsheets...

[Jnavin]

I don't know much about them, it is all practical knowledge, I don't know how to analyze most of the credit products in depth...

Once there was somebody would update these charts regularly, it was very useful. If anyone knows a link about how to calculate them, I can put together a few spreadsheets...

Ah, humility...a rare quality on this board. Very honorable.