Wednesday, December 27, 2006

week 41..happy holidays and .. Mortgage backs

In anticipation of the asset backed class next quarter, i found this WSJ article informative. Here are the key issues:
Next year, some of the same forces that helped mortgage bonds do well in 2006 -- low volatility, continued buying from banks and overseas investors -- are expected to remain in place. Mortgage bonds are expected to perform well, though it will be harder for the market to log the same amount of excess returns over Treasurys.

If the 10-year Treasury yield -- the baseline from which mortgage rates are priced -- were to drop toward 4%, "you have mortgage rates low enough to entice more refinancing into the system," says Scott Kirby, portfolio manager for RiverSource Investments in Minneapolis.

Refinancing is bad for mortgage bondholders as their bonds get redeemed early, leaving them with funds to invest in a falling interest-rate environment.

In that case, volatility would likely pick up as mortgage-bond investors scramble to adjust their hedging strategies by buying options.

4 Comments:

Blogger pgp80 said...

This blog of yours is extremely addictive!...thanks for providing all of this interesting information...I am a prospective MFE student planning on applying for the 2008 spring semester...Is there anyway I could contact you to discuss more about this program?...

thanks

Prakash

4:48 PM, December 28, 2006  
Blogger Quantjock said...

sure.. shoot me an email at swoop2_2000@yahoo.com (i dont check it regularly though!!)

6:45 AM, December 29, 2006  
Blogger Hunkston said...

Who should I get in contact with about a states own laws about mortgage broker bonds and as such, how would I get a mortgage bonds form? I life in England and am considering moving to America, don’t know where yet however I was doing some general reading about housing and came across the term mortgage broker bonds and am a little confused, is it a mortgage or a loan to acquire a mortgage?
Also if I want to set up life insurance do I need insurance bonds? Or can I simply open a policy with a company? I’m a little confused by some of the jargon. I am not moving anytime soon but thought I should be aware of things I will need to understand.

8:21 AM, March 25, 2008  
Blogger JJ said...

Can you tell me what Surety Bonds are? I have heard of Corporate Surety Bonds but I don’t understand what they are, can you help?

3:45 AM, April 01, 2008  

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