ARM Update

August 21, 2017

Yield spreads for new-issue hybrid ARMs to Treasuries tightened approximately 5 bps on the week, as the recent increase in supply was absorbed.  Spreads have retraced nearly half of the second quarter widening after lagging the move tighter in the fixed-rate MBS sector experienced over the past two months.  Despite the recent strength, new-issue Hybrid ARMs remain attractive to fixed-rate MBS on a relative value basis.  The majority of activity last week was focused on longer-reset structures (new issue 7/1s and 10/1s).

Metrics for some commonly traded structures are below:


Michael S. Erhardt, CPA

Senior Vice President

Investment Strategist

Vining Sparks, IBG

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