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Scott Buchta, Head of Fixed Income...........>

US MBS
US MBS: Scott Buchta, Head of Fixed Income Strategy at Brean Capital, likes the
idea of underweighting Agency MBS vs. overweighting Agency CMBS over the next
6-9 months. He said MBS "will be adversely affected by the Fed's gradual
reduction of its balance sheet," so he expects to see "spreads widen early next
year when the Fed reduces its monthly reinvestments by $8B in January and then
$12 in April."
- He adds that "reduced demand, rising volatility and the possibility of higher
interest rates will all have a negative impact on mortgage spreads, with Agency
CMBS outperforming as a result."

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