Sunday, December 09, 2012

Corporate bonds outstanding exceed MBS for the first time in over 20 years

For the first time in since 1991 the amount of corporate paper outstanding in the US is higher than the amount of mortgage related securities.

Source: SIFMA

There are a couple of reasons for this:

1. Net corporate issuance has continued at a good pace even after the financial crisis (seethis post for example).

2. Consumer deleveraging after the financial crisis has been reducing the amount of mortgages outstanding. At some point however, these balances will begin to stabilize (driven by demographics) and mortgage related securities outstanding will begin to climb again.

Total mortgages outstanding in the US (source: Mortgage News Daily)

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Lunch is for wimps

Lunch is for wimps
It's not a question of enough, pal. It's a zero sum game, somebody wins, somebody loses. Money itself isn't lost or made, it's simply transferred from one perception to another.