MBS Live Morning: No, You Don't Need To Watch Higher MBS …

Apr 20, 2022 · Here’s how 4.0 coupons look in terms of bid price, ask price, and the spread between the two (lower = more liquid = more deserving of your attention). The white dotted …

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MBS Live Morning: No, You Don't Need To Watch Higher MBS …

2 weeks from now

Apr 20, 2022 · Rest assured, if bonds were to hold ground at current levels for a few more weeks, 4.5s would make more sense, but also consider that 4.0 coupons can hold rates up to 5.125%- …

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FAQs about MBS Live Morning: No, You Don't Need To Watch Higher MBS … Coupon?

Should you buy current coupon MBS?

Buying current coupon MBS is a way to gain exposure to the cheapness of the mortgage market while expressing a view that high levels of volatility will mean revert. Current coupons, both on option-adjusted and zero-volatility spread measures, look appealing, as shown in the charts above.1 ...

How do analysts determine MBS current coupon rates?

To determine the MBS current coupon, analysts interpolate or extrapolate coupon rates based on the outstanding principals of underlying mortgages. This benchmark is vital in pricing and valuing mortgages, guiding lenders and borrowers in determining fair rates for new mortgages. ...

Should you buy MBS at a discount?

Conversely, yields that are low enough may have prices under Par (100.00), meaning that investors could buy $100.00 worth of MBS at a discount. Bottom line, the higher the coupon of MBS, the higher the price will generally be. ...

Are low-coupon MBS a good investment?

Diving a little into the details of the asset class, perhaps the more significant story this year has been the relative performance of the most discounted corners of the market. Low-coupon MBS have generally outperformed higher coupons because of a lack of supply and persistent fund inflows (demand), primarily in passive index products. ...

Why do low-coupon MBS outperform higher coupons?

Low-coupon MBS have generally outperformed higher coupons because of a lack of supply and persistent fund inflows (demand), primarily in passive index products. This situation has led to a decisive difference in comparative value across the coupon stack but with very few willing to go against it. ...

What are UMBs coupon rates?

UMBS coupons can accommodate rates between 0.25 and 1.125% higher than that coupon. For instance, a 5.0 coupon can contain note rates up to 6.125%, but just because you're quoting rates in the 6.25-7% range depending on the scenario doesn't mean you should be following 5.5 coupons. In fact, even 5.0 coupons are not the best choice just yet. ...