The reasons why are debatable but the numbers don’t lie: banks continue to accumulate agency MBS in mass amounts. I wrote about this very topic in July with a post called “Banks hoard securities…” Though absolute dollar amounts of loans are actually up since April, the growth is anemic and unable to keep up with rising deposits.
Should the Fed engage in a QE3, they would likely buy additional Agency MBS securities – so rates would be pushed down and banks would reap further gains. To put the below chart in perspective, year over year, holdings of Agency MBS are up ~120bil. Total bank credit (All Commercial Banks) increased 190bil, so ~63% is attributed to Agency MBS alone.
Voss Capital is betting on a housing market boom
The Voss Value Fund was up 4.09% net for the second quarter, while the Voss Value Offshore Fund was up 3.93%. The Russell 2000 returned 25.42%, the Russell 2000 Value returned 18.24%, and the S&P 500 gained 20.54%. In July, the funds did much better with a return of 15.25% for the Voss Value Fund Read More