Submitted by Tyler Durden of Zero Hedge
Complete collapse in foreign interest for GSE debt: North American holdings of the latter have increased from 50% to 80% of total notional in one year!
Primary Dealers are selling corporates in droves in order to purchase Treasuries and MBS under the Fed’s gun. Primary Dealers now have a record $368 billion in Corporate, Agency, MBS and Treasury inventory. And the vast bulk of PD holdings of agency debt has less than a 3 year maturity.
The Fed has bought $103 billion in Agencies, almost half of which matures in the next 3 years. Amusingly, the roll coincides when roughly $1 trillion of CRE debt comes due. Good luck.
And just in case you are curious who it is that purchases all those low, low coupon MBS out there: the Federal Reserve has bought almost half a trillion at a coupon less than 4.5%. Does Ben Bernanke honestly believe that taxpayers generating a 4.5% return is enough to continue to finance the homeownership mania? With housing prices still collapsing, it is only a matter of time before taxpayers take collosal principal losses on all these MBS, compliments of yet another completely failed risk assesment by the Federal Reserve.
hat tip Richard
Brick 
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Tyler, would you do a temporal breakdown of those MBS purchases by the Fed? Has their purchasing accelerated this year? When was most of this inventory bought. The plan, always, by the zombie banks was to get someone to buy up their ABS crap, most especialy MBS nuke waste at near face. Or did I misread you and the large part of this MBS 'inventory' is actually swap-stuff which, in principle, the banks are supposed to repurchase whe they are, y'know, financially sound again? (Like never.) Give us a bit more on this, please.