Scott Buchta, head of fixed income...........>

US MBS: Scott Buchta, head of fixed income strategy at Brean Capital, noted that

"MBS spreads continue to tighten as falling volatility (1x10 Swaption vol is the

lowest in 10yrs), a seasonal slowdown in housing turnover rates and a 4.00%

primary mortgage rate have all helped to keep supply at a minimum while the Fed

has remained an active buyer."

- He also expects to "see nominal (MBS) spreads gradually widen over the first

half of 2018 as Fed purchases decrease while housing turnover rates, volatility

and Treasury yields all increase. The Fed will reduce their monthly purchases by

an additional $4B in January, April, July and October and we expect to see

spreads begin to widen in earnest as we move closer to the April increase."