Market UpdateOct 30 2013
As expected the Fed held off on QE tapering and made few changes to the statement. Perhaps most significant is the deletion of the reference to rising mortgage rates and tightening financial conditions presenting downside risks to growth. It’s also interesting that they didn’t comment further on the recent slowness in housing data or the government shutdown. Has the Fed trimmed back their expectations? The Fed will continue buying USTs at a clip of $45 BLN and mortgages at $40 BLN per month. Mortgages immediately sold off after the Fed announcements - a bit of supply coming out from originators. Since then, we’ve bounced off of the lows and are pretty flat on the day. 10yr up about 4bps on the day to 2.52%.