As it stands we’re over a month down the Interregnum rabbit hole, and as we approach the holiday season Doomers might like to monitor sources like Treasury’s press center and FHFA’s Press Releases. It was four years ago, Xmas Eve during the Bush / Obama handover, that Tim Geithner announced unlimited support for Fannie & Freddie in the form of Treasury Dept preferred share purchases, the “unlimited” bit to run until the end of this month — aka Fiscal Cliff Day. Now we’ve quietly gone back to the classic implicit guarantee for Agency Debt, and there is a total of $270 billion support earmarked for the stuff that endures after Jan 1st ’13, but if my calculator isn’t lying that’s only about four cents to the dollar of the roughly $6.5 trillion I understand is Fannie’s and Freddie’s legacy book of MBS they still own or guarantee from the boom era, and they certainly haven’t finished buying mortgages yet. Furthermore, Ed DeMarco will soon be losing his tight grip on the GSE cookie jar.
Let’s all hope the US housing market continues to mend …
Now remember that it was just a few weeks ago we learned the foreign central banks’ holdings of agencies were less than half of what we had previously thought. Even with the Fed’s MBS pile rapidly approaching a trillion dollars that leaves a lot of other bondholders out there, and with agencies counting (IIRC) as Level 2 core capital under Basel III, much of it is likely in conservative institutions like banks, insurance companies and pension managers. So we could see Tim repeating his Secret Santa (or Father Time) gig giving further comfort and joy to the bondholders before he fades off into the sunset next year.
This week the Fed’s own MBS figure surged up $45.155 billion — a couple more like that and the total is well over a trillion. Agencies (and “others”) were flat, but the cenbanks gobbled up a big heap of treasuries.
This week Doom derived the NY Fed data set from a date-limited session with the Data Download Program (we’ve added the “other” cenbank holdings this week as the last column; hope to clean that one up soon 😉 ):
Treasuries growth was a substantial $16.541 billion.
Agencies added $0.618 billion, just about matching last week’s small gain, while “others” lost almost as much, down $0.482 billion.
The net of US obligations thus pretty well matched the treasuries figure, up $16.676 billion.
Twist’s ratio graphs spiked down.
The Setser numbers diverged, agencies mildly, but the treasuries line took a very big step up as there were big losses in the anniversary period.
Notes and References
“Foreign central banks’ US debt holdings rise – Fed”, Reuters, December 6, 2012.