MBS

Truist Financial Corp. plans to stop sales and trading of mortgage-backed securities and government-agency and Small Business Administration bonds by January.

The company shifted $189 billion of agency mortgage-backed securities to held-to-maturity on its balance sheet, shielding its shareholder equity from unrealized losses.

Excess returns on the bonds, which compares mortgage backed security performance to Treasuries, are -0.94% for March, on track for the worst relative performance since September.

Among its major accomplishments in the past year were an update to its Reference Model, the foundation for most of its standards.

Scores will be assigned to all loan pools created since 2010, including future securitizations, and are expected to help investors determine the share of mortgages meeting specific characteristics.

The Federal Reserve Bank of Philadelphia also found that interest rate spikes are preventing modification programs from effectively reducing principal and interest payments as originally intended.

The Fed chair said actively selling securities will become necessary as it looks to reduce its balance sheet, but not anytime soon.

Bond credit enhancement has benefited from historically higher-than-average prepayment speeds and low realized losses despite a COVID-related rise in delinquencies.

In a letter addressed to the heads of the agency and of Ginnie Mae, the association asked them to consider recommendations made by a former government housing policy leader.

The Treasuries market is girding for potential disruptions from the next and trickiest stage of policymakers’ tightening campaign: the shrinking of an $8.5 trillion bond portfolio.