C102 US Coast Guard G5 departed Le Havre, France after arriving from Singapore via Manama, Bahrain stop
SAM067 C32A departed Paris after arriving overnight so this AC did not stay long
Banks Tap Complex Mortgage Product to Fight Deposit Flight Risk
(In the continuing story of this will end poorly for the buyers…..been here before and it ended poorly but don’t worry cuz the banksters say it’s different this time :I and when short term rates tank-via the coming NYFED reverse Operation Twist -they already said they’re going to do it-these will be piles of shit because of the way they are structured to offload liability from the banks as they reset rates each month instead of fixed….wait this takes time to play out)
Banks are ramping up investments in a complex part of the mortgage bond market that offers shorter-term securities, as they cope with the growing risk of their losing deposits amid high rates.
Demand from banks is fueling sales of floating-rate, collateralized mortgage obligations, which are constructed from simpler mortgage securities.Overall, there were $25 billion of new CMO sales in April, the highest monthly figure in nearly three years.
That represented as much as 30% of all MBS that month — the largest slice since 2014, according to Bloomberg Intelligence. Analysts and market participants say banks have been a major driver of the increase. “The CMO machine is revving up,” said Kirill Krylov, a strategist at Robert W Baird & Co. who focuses on mortgages.
Since the Federal Reserve started raising interest rates in 2022, banks have had a harder time hanging onto deposits. Higher rates translate to stronger returns on competing instruments, such as money market funds, and many depositors pulled money out of banks and plunged it into other higher-returning markets.
While banks have taken steps to retain deposits — primarily by paying higher rates — they are also reworking the asset side of their balance sheets by cutting holdings of longer-term bonds and boosting investments in shorter-term securities. The implosion of several regional lenders last year has also made banks acutely sensitive to the risks of owning longer-term debt.
There are around $800 billion of CMOs outstanding, according to Erica Adelberg, a strategist at Bloomberg Intelligence. The share of new CMOs that have floating rates and are backed by Ginnie Mae has been hovering around the highest level in years, according to Oppenheimer & Co. data. Banks tend to prefer CMOs tied to Ginnie Mae, a guarantor of mortgage bonds that is part of the US government. Bank regulators assign those products risk weights of zero, and that’s not expected to change under upcoming rules known as Basel III Endgame.
Mortgage-backed securities are a staple of bank balance sheets alongside Treasury bonds, and CMOs are just one type. But they differ from products that simply pass through income to investors, because CMOs can be customized to meet the needs of whoever is buying them. The securities are complicated,(No they aren’t but they want you to think that)but they are generally designed to lower risk for banks by, for example, cutting the maturities on the securities or carrying floating rates. Because they are built with government-backed mortgage bonds, investors don’t face the risk of losing principal if borrowers default. In that regard, they are very different from the kinds of securities that blew up bank balance sheets during the financial crisis.
The CMOs that banks have been gobbling up are often structured so that the rates reset each month, although there are limits as to how high or low the coupons can go. “Banks are trying to retain less sticky deposits, which are liabilities they treat as floating rate,” said Nick Maciunas, a strategist at JPMorgan. “They need to match that on the asset side, and one way to do that is with floating rate CMOs, which have relatively short durations.”(here’s the downside money portion at the end here)If rates go down significantly and mortgage borrowers start refinancing in large waves, the CMOs banks are investing in would become less attractive. But, for now, they offer an opportunity to minimize interest rate risk while also delivering attractive yields.
https://www.bnnbloomberg.ca/banks-tap-complex-mortgage-product-to-fight-deposit-flight-risk-1.2082046
PlaneFaggin’:CONUS activity
Mexican Navy ANX-01 Learjet 35 departed Mexico City heading NE @43k Ft
Dutch AF MMF59 A330 departing Dulles Intl-yesterday it passed over Amarillo,TX then did roundies at Roswell,NM-Air Center and then did a low pass over New Orleans before back to Dulles
Consequences get applied randomly as all of them insolvent
Crap shoot as to who becomes the next excuse or reason they use- it could be all of them at this point
Mexican Navy ANX-01 Learjet heading for DC (ADS-B has it miss-labeled as a G5)
If they don’t mean anything why are you bitching?
Post it and move on.
But you can’t.
Shit gets missed all the time but you’ve made it a habit to continue complaining.
Which then gets turned into moar complaining that begets moar