The Dow Jones Industrial Average has been hovering around a record for several weeks.
This was in part due to the Federal Reserve’s $4 trillion purchase of mortgage-backed securities that began on Thursday.
But investors and some economists are starting to question the wisdom of the program.
Read moreRead moreOn Wednesday, Treasury Secretary Jack Lew made a statement that signaled that the Fed was planning to begin buying some more mortgage-linked securities.
But as Reuters reports, “there’s little evidence the Fed is seriously considering that kind of buyback program, and that may make the buying of more bonds less attractive to some investors.”
In the past, the Federal Housing Finance Agency (FHFA) has bought a lot of mortgage securities, and the buying spree has led to a sharp drop in the value of the market.
That could make it harder for the Fed to sell some of its mortgage-solving power.
The Federal Reserve also has been pushing the housing market by reducing the federal funds rate, which has been held steady at a record low of 0.25%.
The Federal Reserve has been trying to help the housing sector, and its buybacks have helped it do that.
But it’s a complicated process that requires the Fed and the government to agree on a formula that helps the market and help the government keep the economy afloat.
The question now is whether the Fed will make the right call in buying more bonds, and if it will do it for the right reasons.