CMO Market Update

November 5, 2018

This week we will focus on the October Trade Summary where we look at what our Customers invested in last month. For three months running now, fixed-rate CMOs were almost exclusively what we saw investor interest in. After backing off a bit, treasury yields are back within 3-5bps of year-to-date highs (all of which occurred in October). I commented a couple weeks ago that it had been nearly a decade since portfolio managers have seen 3.50+ yields in intermediate term mortgage investments and it turns out the average yield investors grabbed in October was right at 3.50. VADM structures picked up again last month after taking September off as they continue to look appealing on a relative value basis.

Kevin A. Smith, CFA

Director Investment Product Strategies

Vining-Sparks IBG LP

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