Non-Agency RMBS Year-End Update & 2023 Outlook

As we near the end of what will go down on record as one of the most tumultuous and worst performing years on record for structured products, and all of fixed income, we set our sights for what is on the horizon for 2023. With yields having risen to levels unseen for over a decade, the income provided by debt securities once again will provide the key characteristic that most investors seek in that component of their asset allocation. Additionally, yields have risen to the point that bonds can for the first time in many years benefit
investors during times of crises in equity markets – a key diversification benefit that was lost during the era of an ultra-accommodative Fed. There is now room for yields to fall, lifting bond prices higher, during these flight to safety/quality/liquidity events. As we frame out our views for 2023, we will start with a recap of the current year before delving into our fundamental views on housing and mortgages and finishing with opportunities in the current Non-Agency MBS (RMBS) market and related sectors.


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