FRM Update

November 18, 2019



MBS

Yield spreads for current coupon MBS to Treasurys widened last week. 30-year MBS widened by 2 bps to 98 bps, while 15-year widened 3 bp to 64 bps. MBS valuations remain compelling compared to levels seen over the last several years and to other sectors such as tax-exempt municipals and corporates that have experienced spread tightening during 2019.

Despite the holiday-shortened week, we saw broad based activity in the MBS sector.  There was an acceleration of two-way flow (investors selling and buying).  The selling has been spurred on by financial institutions preparing balance sheets for year-end and positioning portfolios for improved performance. The steepening yield curve has resulted in stronger bids for shorter paper and buying opportunities on the intermediate portion of the curve.




The following is a list of actively traded sectors and coupons from the previous week:

 

Mortgage Rates and Refinance Activity

Mortgage applications for the week ending November 8 jumped 9.6% on a 5.1% increase in purchase apps and a 12.9% gain in refi apps.  Mortgage rates inched higher during the reference week, with the 30-year rate up from 3.75% to 3.81% and the 15-year up from 3.16% to 3.24%.




Michael S. Erhardt, CPA

Senior Vice President, Investment Strategies

Vining Sparks IBG, LP

INTENDED FOR INSTITUTIONAL INVESTORS ONLY.
The information included herein has been obtained from sources deemed reliable, but it is not in any way guaranteed, and it, together with any opinions expressed, is subject to change at any time. Any and all details offered in this publication are preliminary and are therefore subject to change at any time. This has been prepared for general information purposes only and does not consider the specific investment objectives, financial situation and particular needs of any individual or institution. This information is, by its very nature, incomplete and specifically lacks information critical to making final investment decisions. Investors should seek financial advice as to the appropriateness of investing in any securities or investment strategies mentioned or recommended. The accuracy of the financial projections is dependent on the occurrence of future events which cannot be assured; therefore, the actual results achieved during the projection period may vary from the projections. The firm may have positions, long or short, in any or all securities mentioned. Member FINRA/SIPC.
Copyright © 2021
Member FINRA/SIPC
This is a publication of Vining-Sparks IBG, L.P.
775 Ridge Lake Blvd., Memphis, TN 38120