And MS analysts said MBS spreads to 5- and...>

US MBS: And MS analysts said MBS spreads to 5- and 10-year Treasuries "are

within a few bp of their tights of the past 15 years, and MBS spreads to swaps a

few bp from their post-crisis tights. MBS spreads look tight to the level of

vega, so if you think vega will go higher, selling mortgages may be a better

expression."

- They add that "from a supply standpoint, net issuance this year is on pace for

over US$300bn, the highest yearly supply post-crisis. Net issuance plus Fed

balance sheet reduction next year will likely be over US$400bn, the

second-highest number on record, and we struggle to see where demand will come

from at current spread levels."