July continued providing market-moving, yet unthematic, headlines that drove oscillation in spread markets. Mid-June’s tenuous ceasefire between the US and Iran eroded, reigniting the conflict in early July, spiking oil prices and renewing inflationary fears.
Learn More July continued providing market-moving, yet unthematic, headlines that drove oscillation in spread markets. Mid-June’s tenuous ceasefire between the US and Iran eroded, reigniting the conflict in early July, spiking oil prices and renewing inflationary fears.
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June was shaped by two pivotal developments: the signing of a US-Iran Memorandum of Understanding and the first Federal Reserve meeting under Chair Kevin Warsh, both of which repriced geopolitical risk and the monetary policy outlook.
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Pioneer Investments reviews May 2026 agency mortgage-backed securities market activity, including modest MBS outperformance versus Treasuries, Fannie Mae’s continued portfolio purchases, potential streamline refinancing changes and the outlook for agency MBS spreads. The report highlights range-bound spreads, evolving technicals and security selection opportunities amid macro, inflation and policy uncertainty.
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Discover how mortgage-backed securities followed broader risk optimism during a volatile month shaped by geopolitical headlines, oil prices and Federal Reserve expectations. The report highlights agency portfolio growth, the rollout of VantageScore4 loans and a range-bound outlook for agency MBS spreads.
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With the effective closure of the Strait of Hormuz, the resulting disruption drove crude oil prices up 50% and reignited the inflationary concerns that investors had only recently begun to view as manageable.
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Agency MBS remained relatively stable amid market volatility, with a neutral outlook as macro uncertainty, interest rates, and geopolitical events continue to shape performance and mortgage rate dynamics.
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Agency MBS outperformed in January, driven largely by the White House directing Fannie Mae and Freddie Mac to purchase $200B of MBS, tightening spreads and supporting the sector despite broader market volatility.
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The Fed paused rate cuts and held the Fed Funds rate at 3.50–3.75%, signaling a balanced, data-dependent stance with no urgency to ease policy further.
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After a four-year sprint of robust expansion, the US economy finally downshifted in 2025, settling into its natural cruising speed of 2.0% growth. The slowdown wasn't a surprise as it reflected a predictable cooling in consumer spending and a sharp pullback in government consumption. Yet amid this broader deceleration, one segment continued to defy gravity: fixed investment, powered overwhelmingly by the relentless surge in AI-related capital expenditure.
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The US carried out a large-scale attack on Venezuela in a swift operation and captured President Maduro and his wife, Cilia Flores.
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On November 8, President Trump and Federal Housing Finance Agency Director Bill Pulte proposed the idea of a fixed-rate mortgage with a 50-year maturity to help combat housing unaffordability. Such an extension could reduce monthly mortgage payments by about 12% relative to a 30-year fixed-rate mortgage at the same interest rate. Most market experts have panned the idea, and we agree.
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The Federal Reserve (the Fed) voted 9-2-1 to cut the Fed Funds rate by 25 basis points (bp) to a range of 3.50-3.75%, marking the third consecutive Federal Open Market Committee (FOMC) meeting at which rates were cut.
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The US government has reopened, ending a record 43-day shutdown. The economic cost of the shutdown is forecasted to lower Q4 growth by 1.5% but most will be recovered in Q1 2026. It is not inconceivable to miss two months of Consumer Price Index (CPI) data for the first time in the 100-year-old series.
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Despite spread retracement, the MBS sector managed to post another solid month. The Bloomberg US MBS Index gained 0.86% on the month, reflecting a 0.26% excess return to Treasuries. Sector option-adjusted spread (OAS) tightened by 3bp to +28bp. Lower coupons performed best in October, as Fed hawkishness more weighed primarily on investors’ expectations of demand for current coupon.
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The Federal Reserve (the Fed) delivered its anticipated 25 basis point rate reduction, lowering the Fed Funds rate to 3.75-4.00% and marking the second consecutive rate cut. The Fed struck a more hawkish tone than expected as Chair Powell stated a rate cut at the December meeting was not a foregone conclusion.
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Turmoil in a few regional banks and private credit players does not suggest contagion, or even a severe credit contraction.
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The Trump administration has made it an explicit goal to lower mortgage rates as a means to mitigate what it has labeled a housing affordability crisis. Its main effort towards this goal so far has been by encouraging the Federal Reserve to lower the effective Fed Funds rate. Unfortunately, the primary mortgage rate does not have a particularly strong correlation with Fed Funds, as illustrated in the graph on the right. In fact, mortgage rates have risen 3 of the 4 times the Fed cut rates over the past two years.
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The US government shut down on midnight October 1. The shutdown occurred since Republicans and Democrats could not agree to pass a bill funding the government for its fiscal year 2026. Democrats want to see an extension of expiring Affordable Care Act (ACA) tax credits that make health insurance more affordable for millions of Americans and for a reversal of Trump’s cuts to Medicaid, a government healthcare program for the poor.
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Noah Funderburk, Portfolio Manager and Director of Securitized Credit at Pioneer Investments, shares lessons from the tranches on pricing risk, navigating structure, and understanding what truly drives returns in securitized credit.
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