The Federal Reserve bought up half of the gross issuance of mortgage-backed securities issued by agencies last year, the New York Fed said Tuesday in its annual report on the central bank's balance sheet. The $420 billion it bought was composed of $200 billion in additional purchases from the program known as QE3, and another $220 billion from reinvestments of principal payments. At the end of the year, when QE3 was complete, the Fed was buying around 20% of gross issuance, the report said. The report pointed out that yields on agency MBS declined modestly over the year and the spreads to Treasury securities of similar duration narrowed during the year.
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