Finding value in off-the-run transactions.
The Fed’s balance sheet normalization plans raise concerns, but declining prepayment risk should diminish the net impact.
Spreads continued to tighten as refinancing surges, but they remain well above pre-crisis averages.
Negative net supply, insatiable demand, and risk retention requirements compress AAA/BBB spreads.
Increasing apartment supply and the strength of the industrial sector reshape market dynamics in 2017.
We expect volatility to pick up, but fundamentals are strong.
Foreign demand is likely to drive spreads tighter despite healthy supply.
Monitoring credit implications of macro and micro factors.
Low supply, improving fundamentals, and investable scale form a constructive backdrop.
Watch for a possible trade up in quality as credit spreads stay tight.
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