The Fed Actually Begins its QE Unwind (BUT LESS THAN PROMISED)

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Clearly, the Fed has not yet kicked off the unwind of its MBS portfolio. Since the end of QE, the Fed's Open Market Operations (OMO) has continually purchased small amounts of MBS in the market... And it has continued buying them in October with stoic routine.

This bifurcation -- that the QE unwind is happening with Treasury securities but not with MBS -- is curious. But MBS take a while to settle, which could explain some of the delay. After the on-target $6-billion drop in Treasuries, however, I'm tempted to think that the QE unwind of MBS will also eventually materialize, and that the overall package will proceed as announced.