Q: If they tighten this part of the balance sheet (MBS) more than Treasuries what impact will it have. On MBS ETFs, BND and REITs.
Would one be better of holding interm Treasuries instead of BND? MBS are around 22% of BND. Recently MBS and Treasuries have behaved similarly (VGIT, MBB), so has not mattered.
https://www.stlouisfed.org/open-vault/2 ... nce-sheetBetween March 2020 and March 2022, the Fed was purchasing U.S. Treasury securities and agency mortgage-backed securities (MBS)
—Fed Chair Jerome Powell May 4, 2022We also decided to begin the process of reducing the size of our balance sheet, which will play an important role in firming the stance of monetary policy.”