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MBS Day Ahead: Lender Pricing Will Continue to Defy MBS Logic in Some (Many?) Cases

Posted To: MBS Commentary

I devoted years of my life championing the cause of educating mortgage originators on the realities of MBS price movement. The most compelling call to action came during the meltdown where MBS told a story that wasn't being told by Treasuries. Everything changed after the Fed stepped in with a giant syringe full of bond volatility's favorite sedative: QE. The final straw was QE3 which specifically targeted MBS buying in September 2012. At the time, and ever since, I declared that to be proof positive that the Fed "gets it" with respect to mortgage performance vs benchmark rates and that it was proof positive that they wouldn't let spreads slide away into oblivion ever again. The end of 2012 was the last time I would need to go into much detail to explain MBS vs Treasuries…(read more)

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