FYI: One of the best bond trades of 2018 might be one of the top from this year: betting that U.S. homeowners won’t default on their mortgages.
Money managers piled into relatively new Fannie Mae and Freddie Mac bonds known as "credit risk transfer" securities in 2017 in part because they are floating rate, a boon when the Federal Reserve is projecting three rate hikes in the coming year. Investors who bought subprime mortgage bonds after the housing crisis for pennies on the dollar are now getting repaid about $80 billion of principal a year, and are looking to reinvest their funds somewhere.
Regards,
Ted
https://www.bloomberg.com/news/articles/2017-12-26/bond-investors-next-big-trade-is-betting-on-u-s-homeowners?srnd=fixedincome
