As calculated, the Fed left their overnight rate unchanged today. In their prepared statement they reiterated their dual mandate to keep inflation below 2.0% and maintain maximum employment for anyone who wants a job. Then, for emphasis, Chair Powell reiterated their strong commitment to these two congressional mandates.
Jerome Powell said “uncertainty around the economic outlook has increased” and though they are leaving their overnight rate unchanged, they will reduce the monthly volume of their Treasury auctions from $25 billion to $5 billion. MBS will continue to see an average of $35 billion per month cross the auction block.
On that news, the 10 Year T-Bill dropped from 4.32% to 4.24% in less than an hour. Pricing on mortgages has risen 22bps, but the yields are essentially unchanged. We’ll see how the info digests over the next few days. MBS are certainly poised for a shift one way or the other.
