MTBA: Asymmetric Risk/Reward - Raise To A Buy
- Investing in equities and credit markets is challenging due to high valuations; consider mortgage-backed securities for better value.
- MBS spreads are currently at multi-year highs as investors fear a rapid decline in interest rates and mortgage refinancings.
- Interest rates may be higher for longer as the U.S. economy remains resilient, and inflation progress has stalled. This should allow MTBA investors to earn an attractive spread vs. treasuries.
Torsten Asmus
As a value investor, investing in the current market environment is quite challenging, as almost every market appears overvalued relative to historical levels. From equities to credit, investors have priced in the most optimistic scenarios, leaving little room for
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