Bloomberg report on MS betting against U.S. residential mortgage-backed securities.
Says the bank:
- Spreads between Treasuries and agency MBS are poised to widen
- MS suggest selling short a pool of Fannie Mae-backed mortgages with a 3 percent coupon, while taking a long position of half the size in five-year and 10-year Treasury bonds.
Morgan Stanley sees balance-sheet normalization from the Federal Reserve, global reflation and a more aggressive tightening of short-term interest rates from the U.S. central bank as factors that should foster more interest-rate volatility and buoy this trade.
more at the link, above!
