Mustafa Chowdhury on Mortgage Risks, Fed Shocks and Derivatives
Macro Hive Conversations With Bilal Hafeez
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Is the Federal Reserve Providing the Liquidity to the Mortgage Market?
I'm not sure Fed will ever be able to unwind this mortgage book, except a little bit here and there that's running off. And if the US private sector is capable of taking down that kind of size, that has only time window of time where it didn't end very well. So now that the GSEs Federal Reserve is supplying the liquidity to the mortgage market, it's unlikely for home prices to collapse. I think that's probably what they're doing. They have capacity to borrow more for more consumption. That's a massive change if you look in the historical context.
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