Fed to exit mortgage-backed security market today

April 1, 2010 by · Leave a Comment
Filed under: Real Estate News 

This is positive news.  The more we see these government programs winds down and their assistance not being there to support for the U.S. housing market, the more we will see if this is a real recovery or a head fake.   The market has run up in the last few weeks so we are going to continue more impressive earnings and growth to get everyone back into growth and investment mode.  Like I said, this is a good first step.

Bloomberg – The end today of the Federal Reserve’s unprecedented buying of mortgage securities won’t have much effect on the market, BlackRock Inc.’s Curtis Arledge said.

Yields on agency mortgage securities relative to benchmark rates will likely widen “a bit” and become more volatile after the Fed’s exit, though probably won’t expand more than 0.2 percentage point, Arledge, chief investment officer of fixed income at New York-based BlackRock, said today in an interview with Bloomberg Television.

“It’s been one of the more telegraphed changes we’ve seen in a long time,” said Arledge, who oversees about $590 billion at the world’s largest money manager. “The marketplace has positioned itself for the Fed to be absent.”

The Fed’s $1.25 trillion of purchases in the $5.4 trillion market of securities guaranteed by government-supported Fannie Mae and Freddie Mac or federal agency Ginnie Mae helped drive yield premiums to the lowest on record, which they remain near by some measures as the program ends.

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