Federal Reserve could blow up the housing market soon.

[DarthTrader]

This is an interesting conversation, the pertinent info is that as rates rise - mortgage backed securities take longer to mature as people pay down mortgage principal more slowly. Because of this, the FED's expected roll-off of up to $35billion may not exist. Perhaps only $20billion can roll-off. Forcing the FED to sell Mortgage backed securities that are now significantly under par.

Think of 2008's "Margin Call" - the fire sale - where a firm tries to sell a bunch of garbage no one wants. It craters the market because when there's a seller without a buyer, the prices must fall until someone is willing to buy.

Therefore - the FED is now entering a very dangerous phase of its plan - where if they are wrong about the economy it will blow-up everything in a bigger way than 2008 housing crisis, because $35billion mortgage backed securities a month is much larger than what failed in 2008.

 

[Toddsterpatriot]

This is an interesting conversation, the pertinent info is that as rates rise - mortgage backed securities take longer to mature as people pay down mortgage principal more slowly. Because of this, the FED's expected roll-off of up to $35billion may not exist. Perhaps only $20billion can roll-off. Forcing the FED to sell Mortgage backed securities that are now significantly under par.

Think of 2008's "Margin Call" - the fire sale - where a firm tries to sell a bunch of garbage no one wants. It craters the market because when there's a seller without a buyer, the prices must fall until someone is willing to buy.

Therefore - the FED is now entering a very dangerous phase of its plan - where if they are wrong about the economy it will blow-up everything in a bigger way than 2008 housing crisis, because $35billion mortgage backed securities a month is much larger than what failed in 2008.

Think of 2008's "Margin Call" - the fire sale - where a firm tries to sell a bunch of garbage no one wants. It craters the market because when there's a seller without a buyer, the prices must fall until someone is willing to buy.

Selling $15 billion a month is going to cause them to crash?
How thin is the market?

it will blow-up everything in a bigger way than 2008 housing crisis, because $35billion mortgage backed securities a month is much larger than what failed in 2008.

Link?

 

[DarthTrader]

Think of 2008's "Margin Call" - the fire sale - where a firm tries to sell a bunch of garbage no one wants. It craters the market because when there's a seller without a buyer, the prices must fall until someone is willing to buy.

Selling $15 billion a month is going to cause them to crash?
How thin is the market?

it will blow-up everything in a bigger way than 2008 housing crisis, because $35billion mortgage backed securities a month is much larger than what failed in 2008.

Link?

How thin is the market? I don't know, if you can buy a bond at 5% and someone wants to sell you a bond at 2% - which one are you going to buy?

Look man I know you think you're a genius because your houses 5x'd in 10 years in the LARGEST QUANTITATIVE EASING IN HISTORY since 2008, but really, you're a dumb shit. You know nothing about real estate, mortgages, or bonds.

You're those stupid asshats who made money on GME and are now losing everything.

LOL. You're next house-boy.

 

[Toddsterpatriot]

How thin is the market? I don't know, if you can buy a bond at 5% and someone wants to sell you a bond at 2% - which one are you going to buy?

Look man I know you think you're a genius because your houses 5x'd in 10 years in the LARGEST QUANTITATIVE EASING IN HISTORY since 2008, but really, you're a dumb shit. You know nothing about real estate, mortgages, or bonds.

You're those stupid asshats who made money on GME and are now losing everything.

LOL. You're next house-boy.

How thin is the market? I don't know

Then why would you claim that $15 billion a month would crash it?
Is it because you're a drama queen?

if you can buy a bond at 5% and someone wants to sell you a bond at 2% - which one are you going to buy?

Is this stupid question day?

You know nothing about real estate, mortgages, or bonds.

That may be, but it's clear that I know a lot more about them than you do.

 

[DarthTrader]

How thin is the market? I don't know

Then why would you claim that $15 billion a month would crash it?
Is it because you're a drama queen?

if you can buy a bond at 5% and someone wants to sell you a bond at 2% - which one are you going to buy?

Is this stupid question day?

You know nothing about real estate, mortgages, or bonds.

That may be, but it's clear that I know a lot more about them than you do.

Are you fucking retarded? LOL.

There is NO MARKET for mortgage backed securities that pay LESS than the market rates.

That was implied. The "I DONT KNOW" was sarcasm. Idiot.

You don't know SHIT about real estate, mortgages, or bonds. Clearly.

 

[eagle1462010]

 

[Toddsterpatriot]

Are you fucking retarded? LOL.

There is NO MARKET for mortgage backed securities that pay LESS than the market rates.

That was implied. The "I DONT KNOW" was sarcasm. Idiot.

You don't know SHIT about real estate, mortgages, or bonds. Clearly.

There is NO MARKET for mortgage backed securities that pay LESS than the market rates.

Why do you feel that? Is it because you're a moron? LOL!
Is there a market for Treasury bonds that "pay less than market rates"?

The "I DONT KNOW" was sarcasm

How large is the mortgage market? Is it so thin that it can't absorb $15 billion in monthly sales?

 

[DarthTrader]

There is NO MARKET for mortgage backed securities that pay LESS than the market rates.

Why do you feel that? Is it because you're a moron? LOL!
Is there a market for Treasury bonds that "pay less than market rates"?

The "I DONT KNOW" was sarcasm

How large is the mortgage market? Is it so thin that it can't absorb $15 billion in monthly sales?

There's no market for MBS that pays less than market rate because it's fucking obvious.

This is BEFORE FED starts selling their trash bonds into the market.

How dumb is Todsterpatriot?

 

[Toddsterpatriot]

There's no market for MBS that pays less than market rate because it's fucking obvious.

View attachment 650046

This is BEFORE FED starts selling their trash bonds into the market.

How dumb is Todsterpatriot?

There's no market for MBS that pays less than market rate because it's fucking obvious.

You're such a fucking moron.

What about US Treasuries?
If I buy a 10 Year with a 2.7% coupon and rates go up to 2.9%, I can't sell my bond?

 

[DarthTrader]

There's no market for MBS that pays less than market rate because it's fucking obvious.

You're such a fucking moron.

What about US Treasuries?
If I buy a 10 Year with a 2.7% coupon and rates go up to 2.9%, I can't sell my bond?

LOL - it's precisely that lack of liquidity that has caused the bond market to implode.

Of course you can sell your bond (20+ years above), at a substantial loss. And the lack of liquidity is why the volatility is so high.

So when you dump MBS's onto the market that already doesn't want them, it'll crater the MBS price even more.

Which is the fucking point. YOU DUMB ASS.

 

[Toddsterpatriot]

LOL - it's precisely that lack of liquidity that has caused the bond market to implode.

View attachment 650051

Of course you can sell your bond (20+ years above), at a substantial loss. And the lack of liquidity is why the volatility is so high.

So when you dump MBS's onto the market that already doesn't want them, it'll crater the MBS price even more.

Which is the fucking point. YOU DUMB ASS.

LOL - it's precisely that lack of liquidity that has caused the bond market to implode.

Lack of liquidity in the 10 Year? LOL!

Of course you can sell your bond (20+ years above), at a substantial loss.

I CAN sell my bond? Are you sure?

Who was the moron who said there was "no market for MBS that pays less than market rate"
Find that guy and tell him he's a stupid twat.

So when you dump MBS's onto the market that already doesn't want them, it'll crater the MBS price even more.

$15 billion a month? Small potatoes.

 

[DarthTrader]

LOL - it's precisely that lack of liquidity that has caused the bond market to implode.

Lack of liquidity in the 10 Year? LOL!

Of course you can sell your bond (20+ years above), at a substantial loss.

I CAN sell my bond? Are you sure?

Who was the moron who said there was "no market for MBS that pays less than market rate"
Find that guy and tell him he's a stupid twat.

So when you dump MBS's onto the market that already doesn't want them, it'll crater the MBS price even more.

$15 billion a month? Small potatoes.

God damn you're dumb.

All prices are dictated by the margins. $15billion is NOT small potatoes. If you have one extra bond to sell the price has to drop until that bond sells. That's how ALL markets work.

It's obvious you're too stupid to understand that a sale of bonds with dropping liquidity can cause a crisis of liquidity in the bond market if it craters the price and wipes out leveraged longs.

You're literally that fucking stupid.

 

[DarthTrader]

The market for MBS's that are below present day yields is somewhere WAY WAY BELOW this chart.

That's how markets work - MORON.

 

[Toddsterpatriot]

God damn you're dumb.

All prices are dictated by the margins. $15billion is NOT small potatoes. If you have one extra bond to sell the price has to drop until that bond sells. That's how ALL markets work.

It's obvious you're too stupid to understand that a sale of bonds with dropping liquidity can cause a crisis of liquidity in the bond market if it craters the price and wipes out leveraged longs.

You're literally that fucking stupid.

All prices are dictated by the margins. $15billion is NOT small potatoes.

That leads back to my unanswered question in post #2, "How thin is the market?"

Ginnie Mae said, the first half of 2021, Agency MBS traded $303 billion a day.

https://www.ginniemae.gov/data_and_reports/reporting/Documents/global_market_analysis_jul21.pdf

Tell me again how $15 billion a month is too much. DURR

It's obvious you're too stupid to understand.....

Huh? After you said.....

"There's no market for MBS that pays less than market rate because it's fucking obvious"

Get the fuck out of here you silly poser.

 

[Toddsterpatriot]

The market for MBS's that are below present day yields is somewhere WAY WAY BELOW this chart.

View attachment 650055

That's how markets work - MORON.

You telling me how markets work.

Hilarious!

 

[DarthTrader]

You telling me how markets work.

Hilarious!

You clearly don't know. Clearly.

Because it's obvious that dumping any bonds onto the bond market will implode the bond market further. OBVIOUS

The FED plan is to avoid this by just letting bonds mature, but that's incredibly difficult with MBS's

 

[DarthTrader]

God damn you're so ignorant about margins of a trade. It doesn't matter that the market is $305Billion a day. What matters is the LAST bid/ask. Moron.

The reverse repo market is $800billion a day. Doesn't mean that it doesn't sometimes also freeze up in liquidity squeezes.

You're the kind of moron who could never see 2008 coming.

 

[Toddsterpatriot]

Because it's obvious that dumping any bonds onto the bond market will implode the bond market further.

Right. If the Fed sells any bonds, ever, it all implodes!!!!

LOL!

 

[Toddsterpatriot]

God damn you're so ignorant about margins of a trade. It doesn't matter that the market is $305Billion a day. What matters is the LAST bid/ask. Moron.

The reverse repo market is $800billion a day. Doesn't mean that it doesn't sometimes also freeze up in liquidity squeezes.

You're the kind of moron who could never see 2008 coming.

It doesn't matter that the market is $305 Billion a day.

It does if you're selling less than $1 billion a day.

"no market for MBS that pays less than market rate"

What does this ^ mean?

 

[DarthTrader]

It doesn't matter that the market is $305 Billion a day.

It does if you're selling less than $1 billion a day.

"no market for MBS that pays less than market rate"

What does this ^ mean?

No it doesn't. God you literally don't know how markets work do you? If you put something on the market that people DO NOT WANT TO BUY the bid will drop until someone wants to buy it. PERIOD.

MBS's with a lower yield than what is selling now is why for instance that the MBS market has already lost 15%. People don't want lower yield securities so they are being marked down.

The FED adding to that selling pressure with bonds of even lower yield than are being sold now is an easy disaster waiting to happen.