After an initial wobble, the mortgage-bond market found its footing in the first full week of trade following the Federal Reserve’s exit. Trading volumes have risen sharply, buyers have returned and risk premiums have tightened on these bonds that are guaranteed by government-backed housing giants Fannie Mae, Freddie Mac and Ginnie Mae. “Agency mortgages have adjusted to the Fed’s absence now,” said Walt Schmidt, mortgage strategist at FTN Financial. Risk premiums on mortgage bonds widened 0.13 percentage point in the first two sessions after the March 31 end to the Fed’s $1.25trn purchase program.

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3d rendering of a row of luxury townhouses along a street

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