Market Update – Fed to Continue Buying Treasuries Through Mid-September

The Fed bought its first $2.5 billion of Treasuries yesterday after announcing that it would begin purchasing government debt using funds from maturing mortgage bonds that it holds. The expectation is that the Fed will continue to purchase Treasuries through mid-September. In economic news this morning, the MBA mortgage application index report showed that applications rose 13% last week, with refinance activity leading the number at an increase of 17%.

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Market Update – Growing Concern of Government Interference in Markets

The Treasury Department will hold a meeting today to discuss the mortgage market and the future of Fannie Mae and Freddie Mac. There’s growing concern that the government may interfere with the markets which could devalue mortgage bonds. This uncertainty, along with the Fed saying they will buy Treasuries, not mortgages, has caused mortgage bonds to sell-off today.

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Market Update – Mortgages Up After Last Week's Slowdown in Growth

Mortgages are up nicely this morning following last week’s data which pointed to a slowdown in economic growth. Some of the key economic releases for the week are the July housing starts and building permits, weekly jobless claims, and the August Philadelphia Fed business index. This morning, the August Empire manufacturing index expanded less than forecasted. This index has been above the expansion/contraction level of zero for the last year, indicating that the New York area is still in expansion mode.

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Market Update – New Stimulus Measures Look to Jump Start Stalled Economy

Treasury prices took off yesterday after the FOMC meeting and have risen again this morning. The Fed announced new stimulus measures in an effort to jump start the stalled U.S. economy. The Fed is planning on reinvesting principle payments from their mortgage backed securities back into Treasuries. In other news, the June trade deficit report came in unexpectedly wider to almost $50 billion.

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