Jan. 8 at 10:19 PM
PickAlpha Mid-Day:
Mortgage-backed securities outperformed Treasuries Thursday after Trump said he’s directing the purchase of
$200B of mortgage bonds (reported). The Fannie Mae current-coupon spread vs 5–10yr Treasuries tightened by about 10 bps to roughly 1.01% (per Bloomberg).
Tickers:
$MBB $TLT $ITB
Our view is this is policy-put on MBS spreads — the market is trading spread compression, not the level of rates. If the buying is real and sustained, mortgage rates can fall even without a big Treasury rally, which is a cleaner tailwind for housing sensitivity. If it’s headline-only or implementation drags, spreads snap back and you’ll see MBS give up gains first.