Fed Buys $59 Billion in Agency MBS

The Federal Reserve purchased $58.999 billion in agency mortgage-backed securities from government-sponsored entities Fannie Mae (FNM), Freddie Mac (FRE) and Ginnie Mae in the week ending March 4, according to an announcement Thursday by the Federal Reserve Bank of New York. For the first time, the Fed began to list coupon sales as well as its usual MBS purchases from the agencies, and as a result it was able to report only $30.15 billion net in purchases after the sale of some $28.85 billion in agency MBS “by investment managers as agents for the System Open Market Account (SOMA),” the Fed said. As far as purchases are concerned, it was an expensive week for the Fed; it bought $18.65 billion from Freddie, a whopping $39 billion from Fannie and $1.35 billion from Ginnie. The Fed’s purchases marked the largest purchase week for both Fannie and Freddie. The bulk were purchases of coupons with 30-year maturities, with 4.5s taking the cake at a $18.85 billion price tag to the Fed. Nearly $28 billion in other purchases were concentrated in 5.5 and 6 coupons. The Fed also sold in the same week nearly $29 billion in agency coupons, primarily 30-year 5.5 and 6 coupons. A slim $250 million of the week’s sales were 15-year 4.5 coupons, while $3.2 billion in sales were smaller 30-year 4 and 5 coupons. See a table of the week’s purchases and sales. The Fed’s assets shrank $8.75 billion in the same week ending March 4, according to a balance sheet summary released Thursday. The data show the Fed’s consolidated balance sheet fell to a value of $1.89 trillion from the previous week, but is up almost $1.02 trillion from the year-ago week ended March 5, 2008. Write to Diana Golobay at [email protected]. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.