Agency MBS Index Earned -0.55% Over Past Year As Fed Purchases $40 Billion Per Month

Confounded Interest ^ | 12/13/2013 | Anthony B. Sanders

[whitedog57]

The Federal Reserve currently purchases $40 billion per month in an effort to keep mortgage rates low and stimulate the housing market recovery (or bubble?).

Over the past year, the RMBS index has earned -0.55% in spite of (or because of) The Fed’s $40 billion per month in agency RMBS purchases.

And if we compare the BRMBS index to PIMCO’s vaunted total return fund, you will see similar performance until September 2013 when RMBS rallied in terms of price compared to PIMCO’s Total Return Fund.

So, despite The Fed’s $40 billion of agency MBS per month, the Bloomberg MBS index has earned less that 0% for the past year while mortgage rates have risen around 100 basis points (30 year fixed-rate mortgage).

Well, at least the RMBS index did better than gold.

bmbsgold

golden_boy

[whitedog57]

At least The Fed is NOT creating bubbles in mortgage-backed securities and gold.

[Gaffer]

Mortgage backed securities. hmmm....government sinking out future into nothing more than credit derivatives localized (nationalized) in the housing mortgage industry.

Coupled with their new attempts at guaranteeing homeownership even in the midst of homeowners still not able to pay the load and their unproductive returns on these MBSs, it’s just another buyout that won’t amount to any substantive value in the end. Worthless.