Government-backed mortgage securities could fare better than U.S. corporate bonds when the Federal Reserve reduces its debt buying, according to Vishwanath Tirupattur and Vipul Jain, analysts at Morgan Stanley. "In a sharp-selloff scenario that leads to money-manager redemptions, lower liquidity in the corporate sector may turn out to be a bigger liability," Tirupattur and Jain wrote in a report.

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