By Isobel Kennedy
NEW YORK (MNI) – In the week ended November 16, the New York
Federal Reserve bought $5.5 billion agency mortgage-backed securities
under the program the Federal Open Market Committee announced September
21.
The largest purchases this week were in Fannie Mae and Freddie Mac
30-year “to-be-announced” securities with 3.5% coupons for January
delivery. Those buys totalled $2.850 billion.
The next largest purchases consisted of $1.950 billion Fannie Maes
and Freddie Macs with 4.00% percent coupons for December delivery.
Traders in the MBS market took notice Thursday when New York Fed
President William Dudley said in a speech at West Point that if the FOMC
decides to do more quantitative easing he would favor devoting “much” of
the large-scale asset purchases to buying mortgage-backed securities.
Dudley said the MBS buying would be helpful to the housing market
and less disruptive to financial markets than Treasury purchases.
A veteran trader said lower coupon 30-year agency MBS firmed
slightly off the wides on these remarks.
He said at some point 30-years with a 3.50% coupon would be a
“screaming buy” but it is currently a “tough time” given the European
crisis, weaker stocks and widening spreads.
** Market News International New York Newsroom: 212-669-6430 **
[TOPICS: M$U$$$,MMUFE$,M$$AG$,MN$MO$,MAU0B$]