Pimco bullish on US mortgage securities amid government intervention

Investing.com -- Pacific Investment Management Co (Pimco), one of the world’s largest bond managers, maintains a bullish outlook on mortgage securities as the U.S. government works to reduce housing costs.

"We definitely think it could bring down rates and reduce the spread on mortgage-backed securities," Daniel Ivascyn, Chief Investment Officer at Pimco, told Bloomberg News in an interview.

The firm has held overweight positions in mortgage debt throughout 2025, viewing the government’s recent announcement as "another tailwind" for these investments.

"The announcement wasn’t the driver behind our ’overweight’ decision, but it was always one potential catalyst for more aggressive spread tightening," Ivascyn explained.

Despite these positive short-term developments, Ivascyn pointed to deeper structural issues in the housing market. "The long-term problem is that we have too few homes versus the number of households and the only long-term solution will be to increase the housing stock," he said.

The U.S. 10-year yield, which typically influences 30-year fixed mortgage rates, has remained above 4% for most of the past year, hampering the Trump Administration’s efforts to make loans more affordable.

Ivascyn characterized the administration’s approach as creative, saying, "This is an administration that will be very creative on the policy side and I think this is an example of their willingness to engage a balance sheet at their disposal."

He suggested the government could take additional measures if necessary: "To the extent that long rates were to drift higher than what they would like, they certainly have the potential to make outright duration purchases as well."

Ivascyn noted that mortgage securities were already attractively valued before the government’s announcement. "Even though mortgages have tightened relative to corporates, they still look reasonably attractive," he said.

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