New York Fed purchased $23 billion net ($25.7 billion gross) in agency mortgage-backed securities last week.
Over 11 billion of that purchased was FNMA 30 year 5.5% coupons...which support 6% rates. (If you know ANYONE with a 6% rate...send them to me to talk refinance!) Remember the "gross" vs. "net" purchases as stated in the first line of this email. If the feds buy coupons that support rates being refinanced...they will be paid back sooner and the money can be recovered. Pretty smart. It appears as though they are no longer pushing to get rates lower but just to keep things steady and make the investment go farther. See the report here: http://www.newyorkfed.org/markets/mbs/
Next week the feds will start purchasing less mortgage backed securities as part of the exit strategy from the MBS purchase program. The markets did not react to the news of this as I thought they may...in part because they were expecting this. When investors get what they "expect" we don't see volatility.
Today's $29 Billion t-note auction went well and the news of its reception is in part what drove bonds up across the board. The FNMA 4.5% bond picked up 28 bps and is trading at just less than $101 for now. We may see some sell out tomorrow but likely the rates in the morning will be good!
Existing home sales data for last month showed a little less than expected...and the markets reacted somewhat to that news. BETTER news though: We are sitting on less inventory nationwide than we have since April of 2007! (Supply vs. Demand teaches us that this may actually be a good sign that the market will continue to stabilize as long as low rates keeps buyers on the market.)
Dow lost 41 points and Oil fell to $65.89 with news of increased supply and anticipation of weaker demand with the onset of winter.
Have a great eve!
Chad
Awareness: the act of being entirely present. Is there anyone you are aware of who could use my services or friendship? Accountant, Financial Advisor or Attorney? Don't hesitate to let them know...it could be a rewarding relationship opportunity!
Sincerely,
Chad Schauers
www.MetChad.com
cschauers@metlife.com
406 522 0922
