I think that range is now in the 150 to 200 basis point range. And what’s important about what we just experienced in the third quarter is that — for now, over the course of the last, call it, 12 months, we’ve hit the upper end of that range on a number of occasions three or four occasions. We hit the upper end of that range about a week ago and mortgages have sort of bumped off the top of the range and has started to come back down over the course of the last week, finding their footing. And that, I think, is a really positive signal. But I do think mortgages in over the near term will remain sort of in the upper half of that range, maybe 160 to 180 basis points seems to be a comfortable level right now given the amount of uncertainty in the sort of broader fixed income market with respect to the Fed and with respect to the treasury supply and given the elevated level of interest rate volatility.
But over time, as those uncertainties subside and as interest rate volatility comes down, I think mortgages can move back sort of more comfortably in that range. But over the near term, I think there’s still a lot of uncertainty, but I do take it as a positive sign that mortgages have bumped off the top of the range now on a number of occasions and have started to stabilize.
Crispin Love: Thanks, Peter. That’s it from me. Appreciate you taking my questions.
Peter Federico: Sure. Thank you, Crispin.
Operator: Our next question will come from Rick Shane with JPMorgan. You may now go ahead.
Richard Shane: Thanks, everybody, and nice to talk to you this morning. I’d like to talk a little bit about the decisions, the tactical decisions to sell securities during the quarter and repositioning yourself within the stack. Obviously, the market saw the substantial realized losses. And I guess, to some extent, just by rotating within the stack, you’re realizing losses, but as long as you’re reinvesting further up the stack, you will benefit from spreads tightening ultimately. Can you talk about that decision? And can you also talk a little bit about the tax implications of that trade?
Peter Federico: Yes. I appreciate that. From a — we don’t really think about it from a realized or unrealized loss perspective, right? At the end of the day, our securities are all mark-to-market, one way or the other through our income statement, whether they’re mark-to-market above the line or through our comprehensive income because we still have some securities that are available for sale. But that’s a relatively small component. So we don’t think about those decisions as whether or not to realize or unrealized. What we’re trying to do throughout the quarter and we do this every day is what is the right mix of securities that we believe is going to give us the best risk return trade-off right? And moving up in coupon has given us a lot of benefit, not the least of which is that the highest expected returns are in the higher coupons.
So we continue to do that during the quarter. We will likely continue to do that from a sales perspective. We’re always looking to put ourselves in a position from a risk management perspective that gives us the best position for the current environment. So we don’t really think about and make decisions based on the tax implications or on the financial statement appearance, if you will, of our decisions to buy or sell securities.
Richard Shane: Great. Peter, it’s helpful context. And again, look, we’ve had the experience of following you guys for a very, very long time. And when you were externally managed, there were different potential incentives associated with selling instruments at losses. And even then, you guys were very, very thoughtful about where you want to own — what you wanted to own in the stack. And I think the one question that sort of emerges and it’s pretty clear, I think, in looking at the balance sheet. These were not for sales. Can you talk a little bit about what you saw during the quarter, were there are moments of distress where you felt like you needed to do things that you didn’t want to do?
