CMO Market Update

March 18, 2019

CMO spreads widened 2 basis points for the second consecutive week. In the 5-10 year space, spreads have widened 8-12 basis points since the start of the year, extending highs since the beginning of 2018.

We have written previously that when looking for short, front sequential CMOs, it may be worth looking at “cut” coupons to offer some downside protection. It will, and should, come at the expense to rates moving higher, but that may not be as big a concern as it once was. Next week we will take a more detailed look at this.

Travis Nauert, CFA

Analyst, Investment Strategies

Vining Sparks IBG, LP

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