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Treasury Rates Rise Again, MBS Duration Increases (Market Finds A Way)
Confounded Interest ^ | 06/21/2013 | Anthony B. Sanders

Posted on 06/21/2013 9:05:47 AM PDT by whitedog57

Now that we know that The Fed is likely to withdraw its stimulus over the next year, global sovereign rates are rising.

And the US Treasury 10 year continues to rise.

Then there was this tantalizing story in the Wall Street Journal.

Bernanke: Majority of Fed Officials Don’t Expect to Sell MBS

The good news? MBS pay down quickly because of prepayments and other mortgage terminations. Hence, mortgage duration is fairly low.

The bad news? Duration of Fannie Mae 4% MBS was 0.5 on September 25, 2012 and is now at 5.8 (thanks to rising Treasury rates).

So, as Treasury rates rise, the risk (or life) of The Fed’s MBS portfolio grows as well. This will slow down the burn rate of the Fed’s portfolio.

Unfortunately for Bernanke and The Fed, the market finds a way (much like in Ian Malcolm’s speech in Jurassic Park).

Bernanke: “Please make the invisible hand of the free market go away, I beseech thee!”


TOPICS: Business/Economy; Government; Politics
KEYWORDS: fed; mbs; rates; treasury
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To: Vermont Lt
“You have to agree that the increase of interest rates on government debt is not going to drive the economy into the ground.”

It can't happen quick enough!

We need a full blown depression that wipes out every leach in this country that is living on credit!

We also need the government to not intervene like 1920 when that depression was over within a year.

21 posted on 06/22/2013 9:59:49 PM PDT by dalereed
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To: JustTheTruth

You’re welcome.


22 posted on 06/23/2013 8:25:53 AM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: dalereed
We need a full blown depression that wipes out every leach in this country that is living on credit!

Awesome idea! Then in 2016, Bernie Sanders can get elected President.

23 posted on 06/23/2013 8:27:38 AM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: Toddsterpatriot

A depression would straighten this country out!

FDR was the worst President this nation ever had!

It’s his fault the depreassion of 29 lasted for 12 years and he did it intentionally!!!

We are still having to live under his socialist programas!!!


24 posted on 06/23/2013 9:18:36 AM PDT by dalereed
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To: dalereed
We are still having to live under his socialist programas!!!

Exactly! We also elected Obama during an economic crisis. A depression would guarantee the election of another big government clown.

Worst idea ever.

25 posted on 06/23/2013 9:29:48 AM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: Toddsterpatriot

I want to see everyone living on credit totally destroyed!!!!


26 posted on 06/23/2013 9:35:47 AM PDT by dalereed
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To: dalereed

Yeah, I’ve heard your idiotic ideas before.


27 posted on 06/23/2013 9:49:54 AM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: Vermont Lt
Where did you go?

You were going to share your banker wisdom.

28 posted on 06/24/2013 6:32:33 AM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: Toddsterpatriot

I went to sell my treasuries before they went to nothing.


29 posted on 06/24/2013 12:03:26 PM PDT by Vermont Lt (Does anybody really know what time it is? Does anybody really care?)
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To: Vermont Lt
I went to sell my treasuries before they went to nothing.

Treasuries can go to nothing? Please explain further.

30 posted on 06/24/2013 1:41:18 PM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: dalereed
I want to see everyone living on credit totally destroyed!!!!

That may well happen as markets begin to reject Bogus Baraqqi/Bernanke Bucks and the entitlement society implodes. But I think your enjoyment will be short lived, because it will be ugly for most anybody who isn't really wealthy.

31 posted on 06/24/2013 1:45:25 PM PDT by nascarnation (Baraq's economic policy: trickle up poverty)
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To: Vermont Lt

Did you see the recent pic of BO and Putin sitting together looking pissed off?

I thought they looked like two teenagers who had just been taken to the woodshed and told to behave. I think they are both being told what to do by the money changers


32 posted on 06/24/2013 1:49:55 PM PDT by winodog
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To: Vermont Lt
Where'd you go?

You were going to explain something about Treasuries going to nothing.

And free money from the Fed.

33 posted on 06/25/2013 1:02:02 PM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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