My theory is that while the Fed is buying MBS’s, almost everyone who’s NOT the Fed will be selling them. Oh sure, some traders may buy over the first month or two of the Fed’s six month planned MBS-purchasing period, but as the end of the Fed’s intervention nears, you’d have to be pretty damn dumb to be left holding MBS’s. So prices will fall & rates rise even before the Fed’s done trying to force down rates. I suppose the Fed could double down & print even more money with which to try to manipulate the agency MBS market, but at some point, they’ll be done with that scam (probably when they’ve realized it’s not working), and there will be a rapid snap-back causing rates to rise. The net effect of the manipulation scheme may be higher rates, especially since printing money wil eventually result in higher inflation.
