Wall Street Tells Mortgage Buyers Wider Spreads Are a Point of Entry
- Morgan Stanley and JPMorgan raise their views on agency MBS
- Near-term headwinds such as supply, UMBS roll out remain
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Analyst teams at Morgan Stanley and J.P. Morgan have raised their recommendations on the agency MBS sector following the recent widening of mortgage spreads.
Over the past week, Morgan Stanley advised investors to “go long” the sector and cited a wider 30-year Fannie Mae current coupon Treasury option-adjusted spread as a positive. JPMorgan moved to a neutral from an underweight recommendation due in part to the wider spread offered by the Fannie Mae 30-year current coupon to a blend of 5- and 10-year Treasuries.