If It Bleeds, It Yields: Predator's Guide to Agency MBS Domination!

Trump's Tariffs: A Distraction or an Opportunity?

The humans are squawking about tariffs again. Trump the alpha male of their tribe is making threats against Apple and the Europeans. Makes me wonder are they preying on each other now? Good. While they're busy posturing Janus Henderson's Kerschner says Agency MBS are looking pretty tasty. He says they've historically been resilient in market selloffs. 'Resilient,' eh? Like a Yautja in the jungle. 'If it bleeds we can kill it,' but in this case 'if it yields we can invest it!' Ha!

Cheap Thrills: Agency MBS vs. Corporate Bonds

Kerschner also notes that Agency MBS are cheap compared to investment grade corporate bonds. 'There is definitely no sport in hunting game that can defeat you' but 'There is no sport in taking candy from a baby'. Basically the spread on these MBS are wider than corporate bonds which he says is due to a challenging supply backdrop. Supply and demand a simple concept yet these humans complicate it so. Perhaps this is a challenge worth pursuing!

Yield You Son of a...

This Kerschner talks about getting 'basically about 140 basis points more yield than Treasurys'. Yield is good. Yield is like the heat signature of a worthy prey. Easy to track satisfying to acquire. He also mentions that despite the turbulence of Trump's tariffs Agency MBS had their best start to the year since 2020. These humans are nothing if not resilient. I can respect that.

BlackRock's Rieder: A Worthy Adversary?

Ah BlackRock's Rick Rieder also likes mortgage backed debt. He saw an opportunity to add the securities to his fund when prices dropped. Smart prey. Knows how to capitalize on weakness. Rieder says 'When rate volatility picks up it can cheapen up mortgages.' True true. Volatility can be an ally... or a deadly enemy.

The Fed's Game: Supply and Demand Shenanigans

Kerschner says the Federal Reserve has been rolling Agency MBS off its balance sheet adding to supply and banks have been pulling back from the market due to interest rate volatility. Makes sense. Fear clouds judgment. But he believes the Street is starting to lower its projections for mortgage supply this year. 'One hates to miss an opportunity.' Perhaps this is the perfect time to strike! Lower volatility less concern about banks less supply... sounds like a hunter's paradise.

TCW's Whalen: The Waiting Game

Bryan Whalen at TCW has a big chunk of his fund in Agency MBS. He's getting paid to wait for the assets to appreciate in price. 'We'll get through the 'The Waiting Place',' he says. Patience is key even for a Predator. But remember 'The trick is to wait 'em out... wait 'em out.' While the humans wait I'll be watching learning and preparing to pounce when the moment is right. This financial jungle is just another hunting ground and I intend to dominate it.