CMO Market Update

June 24, 2019

Last week, CMO spreads to Treasurys widened up to 5 basis points for 2-3 year paper, but were unchanged for intermediate maturities.

As we approach the midpoint of 2019, I call your attention to the the Treasury Yield and Spread Snapshot from the overall commentary. From a relative-value standpoint, no sector seems to have benefited from the drop in Treasury yields like CMOs have. Year-to-date, Treasurys are down approximately 70 basis points. CMO spreads have improved by almost half of that move, with investors able to earn an additional 30 basis points over Treasurys from the start of this year. For perspective, we have not seen CMO spreads at their current levels since 2016.

Next week, we’ll take a look at the Monthly Trade Summary, with analytics on trades from the month of June.

Travis Nauert, CFA

Analyst, Investment Strategies

Vining Sparks IBG, LP

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