Even with the 10-year Treasury rate backing up considerably in the past few weeks, and with market participants expecting the Federal Open Market Committee to tighten by 50 basis point increments going forward, bank MBS holdings are still not decreasing as of yet.

In a recent report, RBS Greenwich Capital MBS analyst Linda Lowell wrote, "there is no publicly available evidence that the large U.S. banks have yet begun to retreat from very sizable MBS exposures," adding that total security and MBS holdings continued to increase through March 16, which is the most recent data released. "There is no indication that anything has yet altered the strategies of the large commercial banks that have played such a large role in MBS markets over the last four or five years," added Lowell.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.