The firm recommends selling 30-year 5.5s and buying a duration-weighted amount of 5.0s. The rally in bonds has quickly pushed 30-year 5.5s to a point where prepayments are expected to rise substantially in the months ahead; this will serve to limit further price upside on 5.5s. 5.0s should also benefit from a flatter yield curve, as investors typically react to curve flattening by buying the lowest available 30-year coupon. In addition, we expect 5.0s to benefit from enhanced liquidity, as issuance and CMO activity in the coupon increase over time, laying the foundation for persistent specials in the TBA roll market.
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Note payments are linked to two tranched credit default swap (CDS) transactions, one related to the reference obligation between the issuer and SoFi Bank and SoFi Lending and the Issuer.
19m ago -
The Federal Open Market Committee held the federal funds rate at current levels, citing "lack of further progress" toward meeting inflation goals.
6h ago -
During this week's Federal Open Market Committee meeting, officials voted to lower the cap on the amount of Treasury securities that can roll off the central bank's books each month from $60 billion to $25 billion.
6h ago -
The fixed, tax-exempt notes have about 137.5% in expected senior bond parity and 124.1% in subordinate bond parity levels.
8h ago -
Moody's took note of several credit strengths in the portfolio, including that on a weighted average (WA) basis, the contracts have a weighted average FICO score of 767 and only a point higher for the upsized pool.
April 30 -
Plaintiffs seeking class certification claim the bank uses an underwriting system that discriminates against minority mortgage applicants.
April 30