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22% bond yields was the bottom for stocksin 2008, high yield b rated bonds went as high 22% in the peak of panic. This also coincided with the peak of panic for stocks. Quality high growth potential stocks sold for fantastic prices and valuations. And it makes sense to not make sense this way. Bonds are debt, and must get paid first as part of normal business operation. Equity gets the excess profits later as potential dividends or stock buybacks. Debt and equity and the 2 main funding sources for business. Stock investors cannot ignore interest rates and the funding markets. SP:SPX NASDAQ:BND NASDAQ:TLT NASDAQ:IEF NASDAQ:QQQ AMEX:DIA AMEX:VTI
NASDAQ:MBB
by ValuePig
8
Mortgage-Backed Securities Test 6/14/22 Lows. MACD Turns LowerMortgage bonds are taking a hit and testing June 14th lows, following a higher-than-expected August inflation reading of +8.3% y/y ( vs expected +8.1%). MACD is crossing down through the signal, reflecting the downward shift in momentum. It remains to be seen whether to Fed will hike 75bps or 100bps at their Sept 20-21 meeting. Given their steady hawkish remarks regarding their commitment to battling inflation, some speculate we could see the latter.
NASDAQ:MBB
by BlueMonk10
What is causing a 14% decline in MBS?What is a Mortgage Backed Security? A Mortgage Backed Security are shares of a Special Purpose Entity (SPE) that holds mortgages. Whenever someone buys a home they usually purchase it with a mortgage. Investment Banks (underwriters) put up the capital and create a mortgage agreement with the home owner. Banks don’t want to carry the risk of mortgages defaulting so they create a corporation for offloading the risk. The corporation is called a Special Purpose Equity (SPE). The role of an SPE is to issue shares of the corporation for investors to buy called Mortgage Backed Securities (MBS). Investors in the Mortgage Backed Securities take on the risk for a dividend/yield. What is causing a 14% decline in MBS? Back in 2007-2009 was the global financial crisis (GFC) as a result of mis-management of MBS industry that sent the world economies in recession and markets declined. The problem started much earlier leading up to 2005 as new homes were being built and sold at highest levels 1972. Lenders were essentially giving special promotional rates to any buyers with a pulse called sub-prime. When these sub-prime mortgages began to default it caused a cascading effect to the entire housing industry. Today is different, but we may only see the tip of the iceberg. The Fed began buying and holding MBS after the decline in 2008 and currently holds in the tune of 2.7 Trillion in MBS. The Fed has started a cycle of tightening and in September will begin unloading their MBS. New housing starts are down as a result of higher interest rates rising and inflation in commodities like lumber. Volatility in lumber prices were the first to indicate problems over the last 2 years as prices of lumber fluctuated drastically because of problems with supply and demand.
NASDAQ:MBB
by SPYvsGME
27
Black Swan - The Housing BubbleSpeculative Idea for MBB (Mortgage-Backed Securities ETF): - Why is there a speculative housing bubble in the middle of a crisis? - "A major catalyst of the general financial crisis of 2008 was the subprime mortgage crisis of 2007, when a rising wave of defaults on home mortgages sent the value of mortgage backed securities plunging." - "They're in trouble right now," as Colleen Denzler, an investment manager at Smith Capital Investors, which has about $350 billion in assets under management (AUM), and who previously was the global head of fixed income at Janus Henderson, told BI. She is now underweight MBS. "Bubbles get popped when things turn around either through some sort of crisis or through a change in what caused them," she said. "This could be a while, and that's how we're positioned," she added. - "Other complex debt securities whose plunging values were a catalyst for the 2008 financial crisis are rising in popularity today. The synthetic CDO, a pool of derivatives linked to various categories of debt, is among them. Pessimists fear that history may be set to repeat itself, and that cautious investors should take cover." - NY Fed Report: Total household debt rose by $85 billion to $14.64 trillion. GLHF - DPT
NASDAQ:MBBShort
by UnknownUnicorn1043646
1