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
Vining Sparks, IBG