Pimco remains heavily invested in mortgage-backed securities, seeing a major opportunity as the federal government attempts to lower housing costs. Daniel Ivascyn, the firm’s Chief Investment Officer, argues that recent policy moves serve as a 'tailwind' for the market, likely driving down spreads even though Pimco was bullish well before the announcement. The backdrop is a stubbornly high U.S. 10-year Treasury yield, which has hovered above 4%, keeping 30-year mortgage rates painfully elevated for borrowers.

While Ivascyn praises the current administration's 'creative' use of its balance sheet to combat this, he warns of a deeper supply issue. The long-term solution, he notes, isn't just monetary policy but actually building more homes to match household growth. With spreads still looking attractive relative to corporate debt, Pimco is betting Washington’s intervention will continue to support these holdings.