U.S. mortgage bond prices pare losses after Fed statement

NEW YORK, July 31 Wed Jul 31, 2013 2:14pm EDT

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NEW YORK, July 31 (Reuters) - Prices of U.S. mortgage-backed securities pared losses on Wednesday after the Federal Reserve offered no hint in its latest policy statement it would scale back its bond purchases even as it acknowledged further improvement in the economy.

Thirty-year 3.5-percent coupon MBS supported by loans guaranteed by Fannie Mae were down 7/32 with a yield of 3.37 percent, up 5 basis points from late Tuesday.

Prior to the Fed statement, the same issue was 9/32 lower in price with a yield at about 3.40 percent.

The U.S. central bank has been buying $40 billion in MBS a month along with $45 billion in U.S. Treasuries as the pillar of its third bout of quantitative easing, or QE3, in a bid to stimulate the economy and lower unemployment.

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