Agency MBS Weekly: CMO Spotlight: the return of the Guaranteed Final Maturity

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Agency MBS Weekly: CMO Spotlight: the return of the Guaranteed Final Maturity

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Agency MBS Weekly

CMO Spotlight: the return of the

Guaranteed Final Maturity

Commentary: softer inflation triggers rate rally 17 July 2026

Despite the tense backdrop of escalating conflict in the Middle East, fixed income Securitized Products Strategy

markets showed little cause for concern as the benign inflation prints served as a more United States

bullish driver. This week’s CPI and PPI both came in below estimates, with monthly CPI Jeana Curro

at -0.4% (vs estimates of -0.1%) marking the first decline in six years. All in, Treasuries MBS Strategist

rallied, with the 10yr down 5bps WoW. In MBS, the basis has held impressively BofAS+1 646 855 9135

rangebound over the past two months (105-111bps in June, July MTD) and this week is jeana.curro@bofa.com

holding at the top of that small range. We stay neutral but like buying on dips. Chris Flanagan

FI/MBS/CLO Strategist

CMO Spotlight: the return of GMC tranches BofAS+1 646 855 6119

christopher.flanagan@bofa.com

As we noted in our Mid-Year Outlook, the Agency MBS market is likely to continue

innovating and with CMO issuance still robust despite the June flattening, that market GeMBSChu,StrategistCFA

remains a premier outlet for non-traditional structures. One such structure which BofAS

+1 646 855 7147

reemerged from dormancy is the Guaranteed Maturity Class (“GMC”), which has seen ge.chu@bofa.com

roughly $12.4bn in issuance YTD. In a rising rate environment, the limited extension of Ko-Hsiang Kao

the GMC makes a lot of sense, particularly for investors that want to stay in short MBS Strategist

BofAS

duration but are also concerned about a bear flattener should the Fed aggressively hike. +1 646 855 9177

ko-hsiang.kao@bofa.com