Speculation about whether the Fed might try to inject stimulus into the economy by buying more mortgage-backed securities has been greeted with skepticism by some researchers.
"I don't think the investment will come in mortgages," Mahesh Swaminathan, head of residential MBS strategy-fixed income research at Credit Suisse, told listeners to the firm's monthly strategy call.
He said that in addition to current tight underwriting and past borrower misrepresentation on outstanding mortgages that limit the ability of low rates to spur refinancing and provide stimulus, such purchases would likely prove disruptive to the MBS market at this point.
Credit Suisse chief economist Neal Soss said he is "keeping expectations in check" about Fed officials taking any kind of extraordinary action at their upcoming meeting unless they have something up their sleeve he is not envisioning.
