ARM Update

July 16, 2018

ARMs flows were quiet last week but should pick up this week as the bulk of July origination comes to market.  The fixed-rate basis has tightened versus Treasuries to start the month.  New issue ARM spreads, on the other hand, have been stagnant to start the month, despite beginning at more attractive valuations following the widening and underperformance in June.  New issue ARMs have underperformed fixed-rate MBS over the past few months despite lower prices on production coupons relative to the previous year.  As a result, the best value is in new issue ARMs currently, with expectation for better investor appetite during this month’s origination cycle.


Last week, activity was primarily focused on the following:


The following chart reflects the week over week change in LIBOR option-adjusted spreads for ARMs. GNMA ARM OAS’s contracted modestly, while FNMA and FHLMC OAS’s widened.







Ricky Brillard, CPA


Vining Sparks, IBG

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