With the market facing an inverted U.S. Treasury yield curve, analysts from FTN Financial examined the implications for the MBS market of a more severe inversion over the next three months.

Analysts noted in a report that the U.S. Treasury curve has inverted since the Federal Reserve took the Fed Funds Target Rate up to 4.5%. Though analysts still believe that the curve will be steeper by the end of the year, they said it is wise to examine how to live through a short-term curve inversion in one's MBS portfolio.

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