Fed shrinking balance sheet of Mortgage backed securities impact on BND MBB, REITs

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impatientInv
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Joined: Fri Sep 03, 2021 1:26 pm

Fed shrinking balance sheet of Mortgage backed securities impact on BND MBB, REITs

Post by impatientInv »

Fed was still buying mortgage-backed securities (MBS) even with red hot real estate market until March 2022. Many believe they are too late to act on their balance sheet. Seems pretty bad in hindsight. Any reason why?

Q: If they tighten this part of the balance sheet (MBS) more than Treasuries what impact will it have. On MBS ETFs, BND and REITs.

Would one be better of holding interm Treasuries instead of BND? MBS are around 22% of BND. Recently MBS and Treasuries have behaved similarly (VGIT, MBB), so has not mattered.
Between March 2020 and March 2022, the Fed was purchasing U.S. Treasury securities and agency mortgage-backed securities (MBS)
https://www.stlouisfed.org/open-vault/2 ... nce-sheet
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We also decided to begin the process of reducing the size of our balance sheet, which will play an important role in firming the stance of monetary policy.”
—Fed Chair Jerome Powell May 4, 2022
No individual stocks.
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