MFA Musings: 10/14/19
Good morning and happy Monday!
The bond and stock markets are closed today in observance of Columbus Day.
The unrest in the repo market has led the Federal Reserve to announce that it is going to buy U.S. Treasuries to stabilize the market. The Fed plans on buying 60 billion dollars in U.S. Treasuries a month, starting in mid-October and continuing at least through the second quarter of next year.
The Fed has insisted that this is not quantitative easing, as it is “technical measures” to support the implementation of the Fed’s policy. And, since I can be confused after dinner (I am typing this on Sunday night), I looked up the definition of quantitative easing. The definition is “the introduction of new money into the money supply by a central bank.” Could this be old money from the QE portfolio maturities?
As we enter the fourth quarter, the McQueen Financial team reviews prepayment speeds for our models. Most readers will not be surprised to know that mortgage prepayment speeds have jumped up significantly. What I do expect to surprise you is that we are seeing prepayment speeds on auto loans slow. Auto sales appear to be slowing a little bit.
Contact your MFA advisor to discuss ways to grow profitability with an inverted yield curve. All of us at McQueen Financial are dedicated to your long-term success.
Have a great week!