Fed MBS Purchases Slow; Balance Sheet Swells

The Federal Reserve Bank of New York purchased another $30.4bn in gross agency mortgage-backed securities (MBS) this week from government-sponsored entities Freddie Mac (FRE), Fannie Mae (FNM) and Ginnie Mae, according to a late-Thursday announcement. The Fed purchased, net of $8.65bn in coupon sales, $21.75bn in agency MBS in the week ending April 15, a slowdown from last week’s $30.4bn in net purchases. The Fed bought a gross $1.75bn from Freddie’s books, $25.45bn from Fannie and $3.2bn off Ginnie’s books this week. The Fed’s purchases continued to favor thirty-year 4.5% coupons, at a $13bn price tag from all agencies. Meanwhile, the Fed also sold $4.68bn of 30-year 6% coupons. Thirty-year 5.5s came in second in terms of sales, at $2.48bn. The Fed’s MBS net purchases after sales continue their weeks-long slide from recent activity. For the week ending April 8, the Fed’s purchases grossed $74.7bn in coupon sales before $44.28bn in weekly sales. The Fed bought $21.2bn from Freddie, $52.65bn from Fannie and $850m from Ginnie last week. See a detailed table of the current week’s purchases and sales. The Fed’s assets rose by almost $29.2bn the same week ending April 15, according to a balance sheet summary released Thursday. The data show the Fed’s consolidated balance sheet rose to a value of $2.09trn for the week, from $2.07trn the week before, and is up $1.2trn from the year-ago week ended April 16, 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.