Russia just pulled out all of their investments in the US MBS’s, expect MBS’s to get worse and rates to climb, the Fed may announce some quantified easing shortly and agree to buy them but MBS’s are at the largest gap from the 10 year in the history .
Simply
because all of the loans are paying off too early and investors don’t see the
value anymore in mortgage backed securities (no return on investment). When the
loans are bought the investors typically pay money to buy the loans and the
recoup is 3-4 years then every year after they’re making money from the
interest paid in on the loan but when the loans pay early they take huge losses
and their appetite shrinks for mortgage backed securities as a whole so the
spread widens between the 10 year and MBS.
R.A.D.
