Why the Fed Might Bail Out the Commodity Market
In the midst of chaos, volatility always makes matters worse and this is very much the case with the commodities sector. This has led to growing speculation that central banks will step in should unprecedented price swings show signs of systemic impact. As we noted , we don’t know a central banker that wants to bail out commodities. But none of them wanted to bail out anyone else either.
As we noted late last week, FHFA has finalized revisions to its 2020 capital rule that most importantly lighten the GSEs’ capital load and reinvigorate credit risk transfer. Deals from both Fannie and Freddie will come fast, but how furiously will depend also on externalities — i.e., how QT redefines RMBS demand and CRT pricing, what Ukraine does to market risk-on tolerance.
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Capital Grease for CRT Expansion
As we noted late last week, FHFA has finalized revisions to its 2020 capital rule that most importantly lighten the GSEs’ capital load and reinvigorate credit risk transfer. Deals from both Fannie and Freddie will come fast, but how furiously will depend also on externalities — i.e., how QT redefines RMBS demand and CRT pricing, what Ukraine does to market risk-on tolerance.