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UPDATE 1-NY Fed says bought $10.2 billion in MBS Jan 5-7

UP WE GO!!! BIG GREEN DAY TOMORROW!!!

http://uk.biz.yahoo.com/08012009/323/update-1-ny-fed-says-bought-10-2-billion-mbs.html
NEW YORK, Jan 8 (Reuters) - The Federal Reserve Bank of New York said
it bought $10.2 billion in mortgage-backed securities this week as it
launched a program to lower home borrowing costs.
The purchases are part of a $500 billion program announced by the central bank in November as a way to
help stabilize the U.S. housing market, which has entered its third
year of a downturn. The MBS -- issued by Fannie Mae (NYSE: FNM -
news) , Freddie Mac (NYSE: FRE - news) and Ginnie Mae -- have rallied
since the Fed announcement, sending yields that influence consumer
rates sharply lower.
The average fixed 30-year mortgage rate dropped for a 10th consecutive
week as of Thursday, to 5.01 percent, the lowest since at least 1971,
according to a Freddie Mac survey.
The total purchase was in line with market expectations, which were
for an amount slightly below the $4 billion per day average if the
full $500 billion were to be deployed, said Matthew Peterson, a trader
at RBC Capital Markets in New York.
'We always thought they would start slower,' said Peterson, who added
the MBS market held steady after the announcement. 'They don't have to
spend the entire $500 billion, but it's there to be spent.'
Freddie Mac mortgage bonds accounted for $6.9 billion of the
purchases, the New York Fed said on its Website. The Fed also bought
$2.9 billion of Fannie Mae's MBS and $450 million in Ginnie Mae
securities.
Yield spread premiums on bonds in the $5 trillion 'agency' MBS market
have plummeted on the Fed buying and expectations the central bank
will sustain the program. The Fed is also buying up to $100 billion in
unsecured debt of Fannie Mae, Freddie Mac and the Federal Home Loan
Banks, which may also boost demand for MBS or boost direct lending to
banks.
Yields on Fannie Mae MBS paying 4.5 percent interest have dropped to
3.82 percent from near 6 percent in early November, according to
Reuters Pricing Service. The premium to benchmark 10-year Treasury
notes has collapsed to 1.37 percentage points, the lowest in four
months, from 2.26 percentage points in mid-December.
(Reporting by Al Yoon; Additional reporting by Chris Reese; Editing by
James Dalgleish) Keywords: USA FED/MBS