PIMCO recommends Fed suspends MBS positions to boost housing market

According to Coinjie.com, September 17 (UTC+8), US bond investment company Pacific Investment Management Corporation (PIMCO) said on Tuesday that the Federal Reserve should consider stopping its mortgage-backed securities (MBS) holdings to boost the U.S. housing market. Since the launch of the interest rate hike cycle in 2022, the Federal Reserve has gradually reduced the amount of mortgage bonds held on the balance sheet through quantitative tightening (QT), which allows MBS principal and interest repayments to no longer reinvest the proceeds after maturity. In a report on Tuesday, PIMCO pointed out that the Fed has continued to cut its MBS positions over the past three years, resulting in an "extremely wide" mortgage spread (i.e. the gap between Treasury yields and mortgage rates) has always existed. As of last Friday, the spread was about 230 basis points, close to an all-time high. This also pushed up the average interest rate for the most common 30-year fixed-rate mortgage in the United States, currently at 6.35%. Mark Sedner, chief investment officer of PIMCO's non-traditional strategy, wrote that reinvesting funds from MBS principal and interest repayment may be comparable to or even better in reducing mortgage interest rates.