Epstein Secrets

met in D.C. and decided to fire up the printing presses. Led by "Helicopter Ben" Bernanke, they pledged to buy new Treasury securities whenever old Treasuries or mortgage securities matured over or were paid off. That means instead of shrinking its $2.05 trillion portfolio, the Fed will maintain it by pu

means instead of shrinking its $2.05 trillion portfolio, the Fed will maintain it by purchasing an estimated $10 billion to $20 billion per month in Treasuries. It's focusing on securities with maturities between two years and ten years. The stock market was impressed by the move — but only for a couple of

hy should "QE2" be any different? EFTA00734390 You see, starting in early 2009, the Fed vacuumed up $1.25 trillion in mortgage backed securities (MBS) ... $175 billion in Fannie Mae and Freddie Mac debt ... and $300 billion in long-term Treasuries. The stated goal was to ease credit conditions, m

ries likely to spark runs? In this vision, demand deposits, fixed-value money-market funds, or overnight debt must be backed entirely by short-term Treasuries. Investors who want higher returns must bear price risk. Intermediaries must raise the vast bulk of their funds for risky investments from run-proof

fixed values and first-come first-served redemption. "Prime" funds invest in illiquid or low-grade paper to generate higher yields than available in Treasuries. The Reserve Fund, heavily invested in Lehman Brothers debt, "broke the buck" in 2008. Subsequently, the Treasury guaranteed money market fund debt

sis, and only a mild recession. Our financial system and economy could easily have handled the decline in home values and mortgage-backed security (MBS) values—which might also have been a lot smaller—had there not been a run. The central task for a regulatory response, then, should be to eliminate

nce on reinvestment policy* and interplay between rates and reinvestments Note: (*) Currently, the Fed reinvests its maturing holdings of MBS and Treasuries purchased during QE. Research Deutsche Bank [email protected] http://houseview.research.db.com TheHouseView Special — 9 December 2015 7

g IGuidance on reinvestment policy* and interplay between rates and reinvestments Note: (*) Currently, the Fed reinvests its maturing holdings of MBS and Treasuries purchased during QE. Research Deutsche Bank [email protected] http://houseview.research.db.com TheHouseView Special — 9 De

arkets malfunctioning, and they are not too concerned about fiscal issues down the road, given that the Fed is not likely to sell MBS or long-term Treasuries any time soon. This suggests that they would not be driven to taper in the near term by cost considerations. Bottom line on costs: neutral on Dece

they do not see markets malfunctioning, and they are not too concerned about fiscal issues down the road, given that the Fed is not likely to sell MBS or long-term Treasuries any time soon. This suggests that they would not be driven to taper in the near term by cost considerations. Bottom line o

ent GD/FN swap prices. For value of full faith and credit premium, we tighten the initial FNCL OAS by the interpolated agency debenture spread over Treasuries and then re-price in the same model (Tight OAS Price - Mkt Price = Credit value). Finally, to calculate the prepayment differential, we price FNCL

wth and decelerating home price appreciation. Adding up to fair value in 62/FN With the first month of MIP-induced prepayments behind us and agency MBS prices showing some signs of stability post the March FOMC meeting, now presents a fine time to revisit relative value in agency pass-throughs. Sti