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Fed Says a Few Dealers Report Deterioration in MBS Market

The Federal Reserve said a few Wall Street dealers have seen a deterioration in the functioning of the market for residential mortgage-backed securities where the Fed each month is buying $40 billion in bonds.

“A few dealers indicated that the liquidity and functioning of the underlying market for agency RMBS had deteriorated,” the central bank said today in a quarterly survey of senior credit officers. “For other collateral types covered in the survey, the liquidity and functioning of the underlying markets were generally characterized as little changed.”