UBS On-Air: Market Moves Fixed Income Conversation Corner with Dan Hyman (PIMCO) and Leslie Falconio (UBS CIO)
Apr 2, 2026
Leslie Falconio, UBS taxable fixed income strategist, and Dan Hyman, PIMCO mortgage portfolio manager, discuss fixed income opportunities. They examine agency mortgage-backed securities valuations and why some securitized credit niches look attractive. They also cover market drivers like volatility, bank demand, regulatory effects, and near-term flow risks.
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Agency MBS Appears Oversold After Rate Move
- Agency MBS looks like an overshoot after recent volatility and higher rates increased yields while lowering prepayment risk.
- Dan Hyman notes yields rose more than one-for-one with Treasuries, convexity risk declined, and GSE buy programs support the market.
Leverage And Fast Rate Moves Drove Mortgage Spread Overshoot
- Rapid rate moves (>1 SD) and leverage-driven selling magnified mortgage underperformance beyond normal convexity costs.
- Dan Hyman points to servicer selling, deleveraging from mortgage REITs, and pod-shop stops as specific drivers of the overshoot.
Higher Starting Yields Improve Downside Protection
- Starting yields today provide much more downside protection than in 2022; drawdowns like 2022 would take far fewer years to recover.
- Dan Hyman: a similar sell-off would need ~3.5 years to recover today versus 11 years after 2022.