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Mortgage Investors Brace for Post-Election Rate Volatility

  • Index outperformed Treasuries by 12 basis points last month
  • Higher volatility post-election key near-term risk: Nomura
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Next Few Months Will See Some Stress in U.S. Housing: Arbor Realty Trust CEO

Tuesday’s U.S. presidential election has the potential to whip up interest rate volatility, presenting a danger to mortgage-backed securities.

After volatility surged 76% during October -- and closed Friday at its highest since April 23 -- market participants see the potential for it to move even higher. Morgan Stanley analysts on Friday pointed out that, judging by swaption market pricing, the election “is a 2.5 times vol multiplier.”