U.S. mortgage bond prices rise after Fed leaves purchases alone


NEW YORK, Sept 18 (Reuters) - U.S. agency mortgage bondprices rose on Wednesday after the Federal Reserve surprisedtraders when it decided not to pare its $85 billion monthly bondpurchases, blaming the recent surge in mortgage rates and otherborrowing costs as a risk to the economic recovery.

Prices on 30-year mortgage-backed securities with a3.5-percent coupon and loans backed by Fannie Mae werelast up 14/32 with a yield of 3.5096 percent, down7.5 basis points from late on Tuesday.

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