More nonsense form the WSJ.
http://online.wsj.com/article/SB10001424052748703410004575029610236173870.html
How in the world anyone can believe that when the Fed's Mortgage Market Manipulation Program ends on March 31, that things will go back to normal is beyond me?
How in the world are MBS investors going to be able to ignore weak existing home sales, even weaker new home sales, shadow inventories, rising foreclosures, and worsening delinquencies?
I am absolutely at a loss for words here. The only reason housing has not completely fallen into a black hole so far is the Fed's basically being the buyer of last resort in the mortgage space.
"Fed officials believe they can pull back successfully. And a growing group of optimists are joining their camp. They argue that investors, searching for higher-yielding securities, will find government-backed mortgage-backed securities a bargain relative to other investments, like corporate debt, that have rallied for much of the past year."
You cant be serious? These are the same ones who believed that housing would never go down. That sub prime was contained. We are in the midst of a correction in the equity markets. People flee anything that is considered risky. Forget for the moment that the government is guaranteeing this debt. Look at the collateral! Also understand that corporate bond yields are at lows not seen in decades. If there is any type of correction, money is not flowing into MBS rather Treasuries.
"The optimistic view hinges on the government remaining an enormous presence in the mortgage market, both through its mortgage-backed securities holdings and the widespread expectation that it could jump back in if the market falters."
From what we have seen so far with Bernanke's confirmation hearing, the Fed is going to think twice before they intervene any more in the future.
The only way I see MBS catching a bid is if PIMCO becomes aggressive once again. They can buy up the slack that the Fed has left.
No comments:
Post a Comment