As recently as January 10th, Jerome Powell unequivocally stated that the Fed's balance sheet wind-down was on auto pilot.  In other words, they weren't going to be jumping back into buying bonds with balance sheet reinvestments any time soon.  Now in the wake of the January 30th Fed statement, rehashing the balance sheet plan is all the rage.  Today's line-up of speakers put an exclamation point on the topic with most of them clearly communicating a near-term end to the balance sheet run-off.

In other words, there's a 2019 scenario (and a likely one, to hear them say it) where the Fed could begin buying bonds again.  Keep in mind this isn't bond-buying in the QE sense.  The Fed wouldn't be printing money or adding to its balance sheet.  Rather, we're just talking about reinvestments from proceeds on the existing balance sheet.  Even so, that money is just as green and it's not currently flowing into the bond market.  Depending on the details, it could be a fairly big deal for rates if it looks like reinvestments will get turned back on in such a way as to keep the Fed's balance sheet from shrinking.

In the bigger picture, the fact that bonds continued to operate in their same old consolidation range suggests they're not taking anything for granted.  Next week brings some risk, however, in the form of Jerome Powell's congressional testimony


MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
FNMA 3.5
100-11 : +0-08
Treasuries
10 YR
2.6540 : -0.0340
Pricing as of 2/22/19 7:22PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
12:40PM  :  Bonds Improve Again After Fed Speakers; Positive Reprices
8:57AM  :  Bonds Rally as Buyers Pounce on Opening Bell

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "RTRS - BULLARD SAYS HE SEES UNWINDING OF BALANCE SHEET ENDING BEFORE YEAR'S END -FOX BUSINESS"