Publicación de Erica Adelberg

Bloomberg Intelligence https://lnkd.in/gHnn38hj Our monthly mortgage-backed security scorecard starts May stuck in mostly in neutral, with MBS spread widening in April putting levels close to our relative- and fair-value model expectations, giving the sector some breathing room relative to where it started the April. Spread momentum remains relatively weak, though it has shifted from trending wider earlier in April. Fed policy remains the wildcard that seems likely to determine where MBS performance goes from here, as repricing has led to elevated volatility and kept some investors on hold. In particular, banks and foreign investors appear to have shifted into stasis mode, possibly awaiting further Fed clarity before resuming their end-2023 buying campaigns. Please see attached link for further details. #mbs #mortgage #fixedincome #federalreserve #financeandeconomy

Bloomberg Intelligence https://lnkd.in/efCcZvSH Though historic negative returns in 2022 make 2024 look relatively tame, if the year were to end now, total returns for the MBS index would be the next-worst in its history going back almost 50 years, as the resurgence of inflationary concerns has caused rates to sell off and volatility to rise. Daily returns have also been significantly more volatile than usual, continuing a trend that started as the Fed began running off its MBS portfolio. As mortgage rates rise back toward the mid-7% range, new-issue supply should stay relatively light, yet MBS demand may remain limited awaiting further Fed clarity. #mbs #mortgage #fixedincome #federalreserve #financeandeconomy

Bloomberg Intelligence https://lnkd.in/gsNCdag2 Banks' support for mortgage-backed securities (MBS) and residential lending appears to be on hold as the timing of Federal Reserve rate cuts and the possible taper of portfolio runoff remain uncertain. Meanwhile, bond funds saw the first week of outflows for 2024. This bears watching, though it's too soon to call it a trend in an otherwise strong year so far. #mortgage #mbs #fixedincome #federalreserve

@bloomberg intelligence https://lnkd.in/etQ8hqca Though US existing-home sales are above cyclical lows, they continue to fall year over year as mortgage rates stay stubbornly high. This is likely to cap mortgage turnover. Existing home sales have fallen year-over-year every month since 2021. New construction is playing an increasingly significant role in housing-market activity, however, which could increase new mortgage-backed securities supply at the margin. For more charts and details, Bloomberg terminal users can click attached link. #mbs #mortgage #fixedincome #housingmarket

Bloomberg Intelligence https://lnkd.in/eZBk5jeA While mortgage loan demand is off recent winter lows, April applications are still the weakest for the month extending back over 25 years. Rates climbing back above 7% suggest weak loan demand is likely to continue. Lending for new-construction home purchases continues to be a relative bright spot however, with new-home mortgage applications nearing their 2020 peak. #mortgage #mbs #mortgagebanking #housingmarket

Bloomberg Intelligence https://lnkd.in/eyKbGkMZ After finally breaking its multi-year losing streak in 2023, the Bloomberg MBS index has had a challenging start to 2024, as delays in expected Fed easing have pushed yields, volatility and spreads higher. Minimizing exposure to these shifts while maintaining positive carry may give the edge to higher-coupon MBS while markets await Fed clarity. #mbs #mortgage #fixedincomesecurities #federalreserve

Bloomberg Intelligence https://lnkd.in/eHr7cxer The Bloomberg Mortgage-Backed Securities (MBS) Index option-adjusted spread has widened back to the middle of its one-year range after reaching one-year tights at the end of March. This puts the index close to fair value relative to our fundamental economic model, though current coupons still look somewhat tight vs. our relative value model.   In our 2024 MBS outlook, we laid out four potential cases for MBS spreads depending on the path of inflation and the economy, which we based on market reactions in the recent past.  Our risk case was the potential for inflation to reaccelerate, which we were concerned would result in volatility and rates rising, and MBS spreads widening... #mbs #mortgage #federalreserve #fixedincome

Bloomberg Intelligence https://lnkd.in/eXC8Krv2 New Mission Scores Aim to Promote Lending Equity Mission Scores are the latest tool for assessing how well the GSEs (Fannie Mae and Freddie Mac) that package and sell mortgage-backed securities (MBS) are achieving their goal of expanding access to mortgage credit. This scoring aims to drive investor demand for loans targeted at under-served populations. Pools with high scores may appeal to investors based on social mandates and more-favorable prepayment behavior. #MBS #mortgage #ESG #housingmarket

Bloomberg Intelligence https://lnkd.in/e7jC3Q-J Agency MBS issuance in 2023 was the lowest in almost a decade and 2024 isn't starting out much stronger. A rising share of all-cash borrowers and diminished participation of first-time homebuyers has resulted in the lowest demand for purchase loans in nearly 30 years. A small shift in rates seems unlikely to move the needle much. #mbs #mortgage #fixedincome #banking

Bloomberg Intelligence https://lnkd.in/eVAZJA5n Mortgage prepayments rose 11% in March (April Factor), but are down vs. a year ago with mortgage rates and home prices both higher than they were last spring. Slow prepayments continue to be particularly challenging for low coupons priced at deep discounts, though they reduce risks somewhat for higher coupons now trading above par. Mortgage prepayment rates can provide a window into the health of the housing markets and by extension, economic activity. Though prepayment rates rose as expected in March (April factor), they are down versus a year ago as affordability continues to sideline some borrowers. We discuss some of drivers and the implications of this for the MBS market in our attached note. #mbs #fixedincome #housingmarket #mortgage