Hedge funds that trade mortgage bonds are benefiting from less competition from Wall Street trading desks and the portfolios of government-supported Fannie Mae and Freddie Mac, Pine River Capital Management LP’s Steve Kuhn said.
More “mistakes” are developing in the relative prices between different securities as regulators rein in investment banks’ proprietary trading and the two mortgage finance companies’ ability to capitalize on their cheap funding, said Kuhn today in an interview on Bloomberg Television’s “Market Makers” with Erik Schatzker and Stephanie Ruhle.
