Something’s afoot in the Mortgage-Backed Securities (MBS) market. After this week’s drop-off in secondary market trading for private-label residential MBS, comes Friday’s news that MBS trade settlement failures reached a record... As a reminder these ‘fails to deliver’ happen when an MBS seller fails to deliver (aha) to their buyer on an agreed settlement date. We’re not sure what’s driving this recent fails increase — perhaps it’s all that mortgage uncertainty, or perhaps it’s to do with rates. This summer’s round of MBS fails was largely driven by the Fed’s cornering of much of the market for agency MBS via its QE asset purchases. But that cornering should have eased by now, after the Fed said it will reinvest its MBS into Treasuries....