Dec. Fed Plus MBS Deep Dive: Macro Matters

The market will eventually believe that the Federal Reserve's "Put" is further out of the money meaning the central bank may keep the federal funds rate at the peak for longer than the market is pricing, says BI Chief US Rate Strategist Ira Jersey. In this Macro Matter's edition of the FICC Focus podcast, Jersey is joined by Erica Adelberg, BI Mortgage Strategist. Jersey first discusses the December Federal Reserve meeting, his market outlook, and his view that the market will eventually believe in the Fed's resolve to bring inflation down via keeping interest rates higher for longer. Adelberg then discusses the micro foundations of the mortgage-backed securities (MBS) market, from underwriting to settlement. She describes the To Be Announced (TBA) market, how it fits into the financial landscape, and gives thoughts to the affect of "specified pools" of mortgages being included in the Bloomberg Structured Products Index.