Jurassic MBS Market! Agency MBS Prices Swoon With Implied Fed Hikes (Duration Risk Increases Too)

#bubble, #inflation, #wine, @MetreSteven @JeffSnider_AIP @DiMartinoBooth @bondstrategist @RaoulGMI @LukeGromen @dlacalle_IA @EconguyRosie @profplum99 @SantiagoAuFund @biancoresearch @pboockvar @SriKGlobal, Agency MBS, Bank of England, Bank of Japan, Banking, Bernanke, ECB, Economy, Existing Home Sales, fannie mae, Fed, Freddie Mac, GDP, Gold, Housing, Inflation, Mortgage, New Home Sales, Oil, Powell, PPI, REITs, Silver, SPX, Stocks, Swaps, Uncategorized, Volatility, Wages, Yellen, Yield Curve 1 Minute

Agency mortgage-backed securities (MBS) prices started to degrade as The Federal Reserve started to try to combat inflation caused by Biden’s energy policies and rampant Federal spending. That is, under June when the implied Fed O/N rate (red line) cooled and the 30-year mortgage rate (blue line) has come down a little.

In terms of duration risk, the FNCL 3% MBS duration has risen with anticipated Fed tightening.

So, further Fed tightening will result in greater MBS losses AND rising duration risk.

Hold on to your butts!

Published by confoundedinterest17

Published