Once again, the unintended consequences (or fundamental flaw as we noted previously [3]) remain front-and-center, just as with prior episodes of QE, we have seen the market surge into the very assets that the Fed has promised to buy (in this case into Eternity). 30Y current coupon mortgages spread to 10Y Treasuries has fallen - rather stunningly - below 20bps. An all-time record low by a mile. Homebuilders and broad equity markets are not so excited as in his failed attempts to drive people into risky assets (stocks), those 'smart' people have simply front-run the Fed's MBS buying deluge - more than willing to sell the market back to the Fed while reaping some additional yield.
[4]
As we noted before (here [5]) - compressing the mortgage yield to the S&P 500 dividend yield worked in March 2009 - but with multiple at over 4x higher in the S&P and rates less than half the 4% that they were then, relative 'value' is a little different now...