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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: ild who wrote (43593)10/16/2005 8:05:09 PM
From: Win-Lose-Draw  Read Replies (1) of 110194
 
Foreign holdings in the US domestic MBS market are approaching 10%. Much of this is private/institutional money, but there is also significant gov't participation, especially from Asia. But then, one could argue the entire MBS market is a gov't playground since it wouldn't exist without the implicit guarantees backing Fannie and Freddie.

Personally, if I were a foreign entity and wanted a lever on the US economy, I wouldn't f'k around with treasuries, I'd get involved in MBS. Much less regulated, much easier to hide intentions, and, at least potentially, easier to fire a direct shot at the soft consumer underbelly of the US economy.
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