Stocks and bonds are in rally mode this morning on the news that the Fed is embarking on a second round of quantitative easing. The Fed will purchase approximately $75 billion of Treasuries per month until June 2011 for a total of $600 billion. They also quantified their expected reinvestment amounts from their MBS principal cash flows saying those reinvestments would total approximately $35 billion per month. In total, the Fed is expected to purchase approximately $110 billion per month for the next 8 months, almost as much as there will be Treasury supply. The average duration of purchases will be 5 to 6 years and 86% of all purchases will be between 2.5 years and 10 years in maturity.
As for Friday’s non-farm payroll data, expectations are for total payrolls to increase from -95k in September to +60k in October. The unemployment rate is expected to remain at 9.6%. With the news this morning that last week’s Initial jobless claims spiked back above 450, 000, coming in at 475,000, and given other recent employment indicators the +60,000 seems a reasonable expectation.
With the rally in mortgage bonds today, pricing is .375% to .50% better than Wednesday afternoon.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment