Savers and funds grabbed MBSs as banks and Fed retreated

Central banks and commercial lenders became net sellers of bundled mortgages as rates rose, marking break with past crises

Retail, speculative funds and ‘shadow lenders’ became the top buyers of US mortgage-backed securities (MBSs) after global interest rates began their ascent in earnest this year – just as commercial lenders and the Federal Reserve stepped back from the market, analysis by the Bank for International Settlements shows.

Small investors and leveraged funds accounted for 82% of MBS transactions during Q2 – expressed as purchases minus sales. Another 60% of the net amount was driven by buyers that

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