Federal Reserve Balance Sheet Update: Week Of October 20; Foreign MBS Holdings Drop To 3 Year Low

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Thu, 10/21/2010 - 20:43 | 668651 SloSquez
SloSquez's picture

Rock-n-roll....uh....am I supposed to say "Bitchez"?

Thu, 10/21/2010 - 20:52 | 668665 gwar5
gwar5's picture

The foreigners are pulling out of the station. Smart money already left.



Thu, 10/21/2010 - 21:13 | 668695 AUD
AUD's picture

Baloney, foreigners might be 'selling' MBS but they're jumping straight into UST's.

Strikes me as the same game the Fed is playing, swapping worthless MBS for worthless Treasuries to somehow pretend they are worth something.

Unfortunately it seems to be working, note the fall in gold.

Thu, 10/21/2010 - 21:20 | 668708 Bear
Bear's picture

Worthless yes ... but there is a liquid market for UST and getting out of MBS at par (fantasy price) makes real good sense to me 

Sun, 07/03/2011 - 15:07 | 1422865 suedallin
suedallin's picture

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Thu, 10/21/2010 - 21:04 | 668681 tony bonn
tony bonn's picture

"in the past week, bank excess reserves declined by $34 billion"

that's called good old-fashioned inflation. with fractional reserve banking leverage conservatively at 30:1 that represents nearly 1 trillion usd in new circulating money. wonder why the stock market is up powerfully? hint: it's not due to fundamentals.

Thu, 10/21/2010 - 21:14 | 668699 SloSquez
SloSquez's picture

"market is up powerfully? hint: it's not due to fundamentals."  Ya think?

Thu, 10/21/2010 - 22:34 | 668850 flacon
flacon's picture

I like Apples and Amazons. Makes me yum-yum-yummy! /s

Thu, 10/21/2010 - 21:18 | 668703 bullandbearwise
bullandbearwise's picture

Where does it say a drop in custody holdings means the security was sold by the foreign owner? They could have moved the securities to the IMF or BIS...

Thu, 10/21/2010 - 22:19 | 668812 99er
99er's picture

One wonders if foreigners are abandoning the MBS space...

The Geithner Put.

Fri, 10/22/2010 - 01:00 | 669080 doolittlegeorge
doolittlegeorge's picture

at some point those Chinese yields become tempting.  I think ZH is spot on with the "end of MBS" and may include "securitization" for "an extended period." (in reference to their stated policy of keeping interest at zero of course.) this obviously cannot come as a surprise as "the Fed has had other priorities...like bankrolling the most bankrupt government in US history."  are we in the crisis right now?  it's hard to tell. we reside in such a looking glass world of money.  i find it really hard not to laugh uncontrollably, tho not because it is funny at all.  in fact "it's the exact opposite which really enrages people."

Fri, 10/22/2010 - 22:27 | 669478 Battleaxe
Battleaxe's picture

Here's the best synopsis I've seen of the Fed's activities in the beginnings of the crisis in '07-'08.



Fri, 10/22/2010 - 11:08 | 669690 tom
tom's picture

Foreign official holdings of Treasuries in Fed custody was up $200b in same period. Which started mid-August, right around FOMC announcement of "QE lite" and Ben's Jackson Hole speech. Looks like China anticipating QE2, selling MBS and buying Treasuries, because the latter is what the Fed is expected to be buying.

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