JMBS News and Press, Janus Henderson Mortgage-Backed Securities From 03/07/23

2023-03-07 11:49:00 ET Summary The relative affordability of the typical new home sold in the U.S. improved in January 2023. Looking forward, we already know mortgage rates averaged close to the same in February 2023 as they did in January. March 2023 however may present a ver...

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 Why the U.S. economy continues to display polyurethane-like flexibility and resilience, despite encountering extraordinary shocks. How portfolios can also be built with flexibility and resilience in mind. Why high-quality fixed income assets are today a critical component of...

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 The University of Michigan Consumer Sentiment added a stronger-than-expected 1.5 points to January’s strong gain to reach 66.4, the highest reading since January 2022. Beijing lashed out at President Joe Biden for saying Chinese leader Xi Jinping faces ‘enormous pr...

Summary Lower coupons provided the fuel to tightening while production coupons battled supply to a standoff. The market is still coming off the historic and Fed-induced lower interest rates sparked by COVID measures. While the U.S. housing industry faces headwinds, so do those who'v...

Summary The average 30-year fixed mortgage rate spiked to 6.39% today. It bounced by 40 basis points in two days off the low of 5.99% on Thursday, giving up a month worth of declines in two days. The 2-year Treasury yield has jumped by 37 basis points since the close on Thursday, 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...