Ginnie Mae Securities Underperform Fannies Again
The ten-year bond yield rose 7 basis points last week. Ginnie Mae TBAs gave up 20 ticks, while Fannie Mae TBAs only gave up 14 ticks.
Fannie Mae TBAs started the week at 104 15/32 and gave up 7/16 to close at 104 1/32. The ten-year bond yield increased by 7 basis points.
Last week, the ten-year bond yield increased 7 basis points, and mortgage rates rose from 3.85% to 3.9%.
Bond yields continue to march higher. Last week we saw more bond-unfriendly data with housing starts and an elevated consumer price index.
Last week we had some stronger-than-expected economic data with housing starts and building permits topping 1.1 million.
We have some important real estate data this week. If GDP does turn out to be almost a 1% contraction, it’s hard to see how the Fed could raise rates in June.
Various surveys in 2015 suggest that approximately 45% of PE funds active in real estate currently invest less than 5% of their total assets in the asset class.
In the world of asset allocation, there are three forms of publicly traded private equity business firms.
With a low cost operating structure and differentiated strategy within the lower middle market, Main Street is considered one of the strongest companies in the BDC sector.
BDCs are a form of publicly traded private equity fund that provide investors liquidity due to being listed on the public stock exchanges.
A special-purpose acquisition company (or SPAC) is a corporation formed by private individuals to facilitate investment through an initial public offering (or IPO).
Investors can purchase shares of ETFs that track an index of publicly traded companies that invest in PE funds.
In a private equity fund, you just have to put in the money, and the fund takes care of everything else.
Real estate private equity funds have been attracting unprecedented amounts of capital, with assets under management reaching an all-time high of $724 billion.
Fannie Mae TBAs started the week at 104 15/32 and ended up in the same place they started at. The ten-year bond was more or less unchanged as well.
The ten-year bond yield was flat at 2.15% last week. Ginnie Mae TBAs gave up 3 ticks, while Fannie Mae TBAs were unchanged.
Mortgage rates participated in the bond market’s volatility. However, they didn’t fall as much as bond yields did on Friday
Bonds in the United States had followed eurobonds and joined the global bond market sell-off. That sell-off seemed to end last week.
Last week, some weak economic data put a floor in bonds and ended a furious sell-off that began about a month ago.
Employment costs increased 0.7% in the quarter ended March 31, 2015. This was a small increase from the December quarter.
But if I knew how to manage my portfolio safer and smarter than most hedge fund managers, I could realistically grow my wealth.