FRM Update

May 20, 2019


Yield spreads on current production MBS to Treasurys were relatively stable last week, with 15-year widening 1 bp to 51 bps, while 30-year held firm at 76 bps.  The global flight to safety continued to push yields downward last week.  The 5-year Treasury has now declined over 90 bps since early November 2018, as valuations have improved significantly.

Investors were very active last week and took advantage of the improved pricing to dispose of underperforming positions and odd-lots.  Reinvestments were largely focused in the 20-year sector in 2.5s to 4.0s. There was also solid buying activity in 15-year 3.0s and 3.5s with investors shying away from higher coupons likely because of the associated premiums.

Mortgage Rates and Refinance Activity

Benchmark mortgage rates declined last week. 15-year mortgage rates decreased 6 bps to 3.41%, while 30-year mortgage rates fell 3 bps to 4.02%, just above its lowest level since early 2018 (3.87%).

Michael S. Erhardt, CPA

Senior Vice President, Investment Strategies

Vining Sparks IBG, LP

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