And then of course, the media effect is very different today than it was in 2020 and 2021. So, I think there are a number of factors that will likely mute the prepayment response to some degree or at least shifted a little bit further out going forward. But then on the other hand, there is a lot of capacity in the system and a desperate need to feed the origination machine. And so I do think that lenders will be aggressive and willing to work for better margins just to capture what little volume there is. So, it’s something that’s going to be very interesting to see how it evolves over the next few months.
Peter Federico: And Rick, if I could just add to that, to build on Chris’ point because I think it informs our outlook a lot when we think about the supply of mortgages this year and 2023 to the private sector, which is obviously a key in the Fed’s portfolio as part of that. But when you think about €“ Chris mentioned the refinance ability of our portfolio for a 50 basis point move, assuming a 6% mortgage rate today, only 15% of the universe would have a 50 basis point incentive for a 200 basis point rally in mortgage rates, only 15%. It would take a 300 basis point rally in mortgage rates to have 45% of the mortgage universe refinanceable. So, I think that, that informs us a lot about the amount of refinance activity that we are going to see over the near-term, which is one of the reasons why we are more optimistic about the supply of mortgages.
Rick Shane: Look, it’s totally fair. And to circle back to actually where I started, if you compare the bottom of the stack in €˜19 and the top of the stack in 2022, as of December 31st, the premium at the top and the bottom is exactly the same. So, I mean the market is behaving in a very different way. So, the risks are even at the high end of the stack, a lot different than they were a few years ago.
Peter Federico: And the point that Chris made about the lower coupons, obviously, because they are such a huge part of the universe and to the extent that we see bond fund inflows, they are going to be potentially a really good total return trade, not great carry, but could have some total return potential.
Rick Shane: Got it. Terrific guys. Thank you so much.
Peter Federico: Sure. Thank you.
Operator: The next question comes from Bose George with KBW. Please go ahead.
Bose George: Everyone good morning.
Peter Federico: Good morning.
Bose George: Given the spread tightening quarter-to-date, can you just talk about current hedge spreads and levered ROEs?
Peter Federico: Sure. You can look at them in a bunch of different ways from a spread perspective, I think one of the sort of simplest ones that I keep coming back to. I always like to look at the 10-year just more for long-term guidance. But when you think about, for example, current coupon spreads, it’s really probably better to look at it on a blended basis. It’s easy to look at them, and I think very informative to look at like current coupon spreads to a blend of 5-year and 10-year hedges, which is more consistent with the way we would hedge our portfolio. And further, you want to look at that as a blend between treasury-based hedges and for us, SOFR-based swap hedges. But if you look at current coupon to 5-year and 10-year treasury spreads, that’s probably around 130 basis points.
