BKT News and Press, BlackRock Income Trust Inc. From 03/07/23

2023-03-07 14:00:00 ET Summary U.S. Agency Mortgages slumped after a promising start to the new year, as rising Vols detracted from embedded call structures like MBS. MBS issuance has taken a nosedive the past year plus, as rising rates, falling refinances and limited repeat busin...

Summary The duration of the Fed’s mortgage-backed portfolio has lengthened enormously since the positions were originally acquired by the Fed. Those mortgages are at very low interest rates; hence, the recent rise in rates means the amount of refinancing has dropped to minimal le...

Summary One of the phrases making the rounds among the financial media chatterboxes this week has been “no landing”. The macro news has indeed given some cause for cheer relative to some of the more dour scenarios we’ve been looking at in the past few months. Wh...

Summary We see central banks stumbling into a more nuanced phase of the inflation fight and nearing a pause on hikes. We like short-term bonds and credit for income. U.S. stocks rose but trimmed gains and Treasury yields jumped after U.S. jobs data showed a tight labor market, reviving ...

Summary We don’t see major central bank rate cuts this year, so we prefer to earn income in short-term bonds, high-grade credit and agency mortgage-backed securities. U.S. stocks rose and Treasury yields were mostly steady. U.S. Q4 GDP was resilient but declining consumer spendin...

Summary In a post-QE4 higher-mortgage-rate environment, we think construction of an Agency MBS allocation should focus on two major themes. The first opportunity is a more traditional one - buying current-coupon MBS. These are the bonds that are currently being originated at close to pa...

Summary In 2022, historically high inflation led global central banks to make a series of bold tightening moves. In the U.S., it’s our view that inflation may gradually move toward the Federal Reserve’s (Fed) 2% goal over the year. With a hamstrung Fed, the global outl...

Summary U.S. Agency Mortgages closed out the month on a sour note as earlier tightening was faded into year-end illiquidity. Market selloffs early in the year took OAS levels off their steamy perches and made the sector more attractive,. To say the year was turbulent would be accura...

Summary MBS valuations are attractive both relative to their own post-Global Financial Crisis history and relative to investment grade corporate bonds. The sharp slowdown in housing activities indicates lower organic supply of MBS, slower prepayment speed, and less paying down of the Fe...

Summary After enduring one of the worst years on record across asset classes, investors should find more cause for optimism in 2023, even as the global economy faces challenges. Inflation is likely to moderate, and risks to the inflation outlook appear more balanced than they did severa...