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Pullback Considered Corrective


Holding Above Recent Lows


BLOCK, Large 3Y Midcurve Put Condor

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Q: RE tapering MBS purchases

  • A: A number of participants raised that questions around MBS and tapering at the meeting, as a matter of fact. And I'll just say that generally speaking, I think the Treasury and MBS purchases affect financial conditions in very similar ways.
  • There may be modest differences in terms of contribution to housing prices, but it's not something big. So where I think we are is: there really is little support for the idea of tapering MBS earlier than Treasuries. I think we'll taper them at the same time, based on where people are now.
  • The idea of reducing MBS purchases at a somewhat faster pace than Treasuries has attraction for some people, others not so much. And I think it's something we'll continue to discuss.