After proving to be the best short opportunity during the housing bubble in 06-07, the very same people who made millions on the short side are now long. Why is this? I can see 3 clear reasons why these bonds are trending:
1) First and foremost, the federal reserve's latest QEinfinity is implemented through buying these securities. The fed has nearly unlimited authority to prop up this market as much as it likes. For this reason these securities are practically bulletproof for as long as the fed maintains this authority.
2) Housing market has already partially crashed. Weather or home prices have further to fall, a lot of delinquent debt is currently out of the system, and it will take quite a bit more fed purchasing to reflate the bubble to levels where the bonds should be shorted again.
3) Stricter lending guidelines and an interest rate that beats out most other debt/money markets making for very consistent returns.
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