ARM Update

February 25, 2019

Yield spreads between hybrid ARMs and Treasuries held firm last week, as the broader bond market moved up in price, sending yields slightly lower across the curve.  Hybrid ARM spreads have tightened in the month of February, lagging the performance of fixed-rate MBS, which have tightened at a slightly more aggressive rate.

New issue ARM flows were light last week, with 87mm in new issue ARM selling primarily from Ginnie Mae (43mm).  Supply was focused in Ginnie Mae 5/1s (43mm), Freddie Mac 7/1s (13.2mm), and Fannie Mae 7/1s (12mm).  Freddie Mac and Fannie Mae also combined for gross issuance of 11.4mm in hybrid ARM 5/1s and 7.4mm in hybrid ARM 10/1s.  The recent selloff and mortgage tightening bodes well for ARM demand during the origination cycle, particularly given the attractive spreads in the sector.

Last week, ARM activity was spread across a variety of lists and primarily focused on the following:


Ricky Brillard, CPA

Senior Vice President, Investment Strategies

Vining Sparks IBG, LP

The information included herein has been obtained from sources deemed reliable, but it is not in any way guaranteed, and it, together with any opinions expressed, is subject to change at any time. Any and all details offered in this publication are preliminary and are therefore subject to change at any time. This has been prepared for general information purposes only and does not consider the specific investment objectives, financial situation and particular needs of any individual or institution. This information is, by its very nature, incomplete and specifically lacks information critical to making final investment decisions. Investors should seek financial advice as to the appropriateness of investing in any securities or investment strategies mentioned or recommended. The accuracy of the financial projections is dependent on the occurrence of future events which cannot be assured; therefore, the actual results achieved during the projection period may vary from the projections. The firm may have positions, long or short, in any or all securities mentioned. Member FINRA/SIPC.
Copyright © 2021
This is a publication of Vining-Sparks IBG, L.P.
775 Ridge Lake Blvd., Memphis, TN 38120