CMO Market Update
February 18, 2020
CMO spreads to Treasury yields were unchanged last week and have tightened 5 to 8 basis points year-to-date. Spreads for 3, 5, and 10-year PACs and Sequentials remain at their respective 1-year averages. View the graphs below for 3-year bonds, where our customers typically invest in this sector (see monthly Trade Summary for additional trends).
Considering 3 years of history, however, suggests there is additional value in this space. Despite some tightening to start the year, spreads are still +1 Standard Deviation above their respective 3-year averages.
Don’t forget about our Investment Alternatives Matrix, typically released the second business day of the week, to get a sense of the market and how different sectors are projected to perform.
Travis Nauert, CFA
Analyst, Investment Strategies
Vining Sparks IBG, LP