Recent uncertainty surrounding equities drove investors into bonds, especially agency MBS. One result: The average daily trading volume in agency product climbed to a multi-month high in August.
As investors sift through the tea leaves of the bond market, the average daily trading volume in agency MBS increased 11% in July from the month prior. But where we go from here is anyone’s guess.
Instead of larger, multi-issuer uniform MBS pools, FHFA wants seller/servicers to closely monitor the prepayment speeds of their broker/correspondent channels to ensure closer alignment of Fannie/Freddie pools.
The key factor for TBA investors is prepayment speeds. A quick scan of the FHFA data show that the conditional prepayment rates for UMBS issued by Fannie and those issued by Freddie have remained comparable since the launch of the single security in June.
The Fannie/Freddie JV in charge of the uniform MBS has a new CEO with a deep background in mortgage finance: Anthony Renzi. In early 2018, he was hired to run the day-to-day operations of Cenlar, the big kahuna of subservicing.
In a bid to ensure the GSEs maintain oversight of UMBS prepayment speeds and alignment, the FHFA is seeking feedback on all policies that might affect fungibility and the viability of the TBA market.