Anxiety Strikes $8 Trillion Mortgage-Debt Market After SVB Collapse

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Now that the FDIC has taken over SVB, investors expect mortgage-backed securities to be sold off, pushing prices lower

Illustration: Preston JesseeStrains in the banking sector are roiling a roughly $8 trillion bond market considered almost as safe as U.S. government bonds.

So-called agency mortgage bonds are widely held by banks, insurers and bond funds because they are backed by the mortgage loans from government-owned lenders Fannie Mae and Freddie Mac . The bonds are far less likely to default than most debt and are easy to buy and sell quickly, a crucial reason they were Silicon Valley Bank’s biggest investment before it foundered.

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