Mortgage-Backed Securities (MBS) are a type of asset-backed security issued by the US government or by government agencies

These securities are purchased by investors and secured by mortgage debt, providing a steady stream of income for investors. This article will provide an overview of the MBS market on October 25, 2020.

On October 25, 2020, the MBS market was fairly steady throughout the day. There was minimal impact from the initial jobless claims report, which showed an increase in job losses for the week. This figure was expected to increase due to the large number of layoffs occurring in the US due to COVID-19.

The benchmark 10-year Treasury note yield ended the day at 0.845%, barely changed from the start. That rate is important because it is used to determine interest rates for mortgages. Mortgage interest rates remained largely unchanged as well, with the average 30-year fixed-rate loan remaining at 2.69%.

The Fannie Mae and Freddie Mac 30-year current coupon closed the day at 102.875, up 2 ticks from the prior day. While this may not seem like much movement, it indicates investor confidence that these securities will continue to provide relative stability in an otherwise volatile market.

In addition to the changes in the MBS market, the stock markets also experienced some minor fluctuations. The Dow Jones Industrial Average dropped slightly, down 0.31% to 27,765.55 points, while the S&P 500 and Nasdaq Composite both posted modest gains of 0.04% and 0.21%, respectively.

Overall, the MBS market on October 25, 2020 was relatively stable, with no major changes to mortgage interest rates or the benchmark 10-year treasury note yield. Investor confidence in these securities remains high, helping to prevent any significant upheaval in the market. The stock markets also saw some minor fluctuations, but not enough to disrupt the overall stability of the market. This relative stability is likely to continue in the short term, as investors remain confident in the safety of their investments.

This article was contributed on Jul 27, 2023