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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (4138)	12/29/2003 10:39:11 PM
From: russwinter	Respond to of 110194

Some insights and data from excerpted from Noland on who is now buying agency securities. Did leveraged speculators buy the 24.7 billion in MBS in November?: Fannie Mae had a somewhat slower November. The company’s Book of Business expanded $18.5 billion, or 10.8% annualized, to $2.171 Trillion. Year-to-date, Fannie’s Book of Business has surged $350.8 billion, or 21.0% (up $591bn or 37% since Jan. 02). And while Fannie’s Retained Portfolio contracted $6.3 billion during the month to $906.4 billion, MBS sold into the marketplace surged. For the month, non-retained MBS increased $24.7 billion, or 26.8% annualized (indicative of heightened leveraged speculation). Over two months, non-retained MBS were up $53.6 billion, or 27% annualized. This is quite a reversal from August and September’s $37.8 billion contraction (when the leveraged players were liquidating). It is worth recalling that Securities Broker and Dealers' holdings of Total Financial Assets expanded at a 25% annualized rate during this year’s first half to $1.5 Trillion. This asset growth was associated with a major increase in leveraged speculation (especially in the mortgage-backed arena). Tumult in the Credit and interest-rate derivatives markets brought this expansion to an abrupt halt during the third quarter. There are indications, however, that (with Fed assurances) aggressive leveraged speculation has returned.