Rick Shane: Great. Yes, I’m guessing the 3.5s and 4s are going to be on the books for a really long time. Thank you for taking my questions, guys.
Peter Federico: Sure, thank you.
Operator: Ladies and gentlemen, our last question today comes from Eric Hagen from BTIG. Please go ahead with your question.
Eric Hagen: Hey, thanks. Good morning. Just a follow-up on maybe the liquidity. How are you guys thinking about the amount of liquidity you’re comfortable holding at these spread levels versus when the spreads were wider, and maybe how does that amount of liquidity play into the amount of leverage you’re comfortable with at different spread levels, the shape of the curve and all that?
Peter Federico: It certainly does. I mean, what we’ve learned over the last couple of years is that just generally speaking, the liquidity in the bond market, both for U.S. treasuries and agency MBS, is not what it used to be. With the Fed changing its balance sheet, with the amount of regulation post-Great Financial Crisis, we now know that the major source of demand for both treasuries and mortgages can be money manager bids, which tend to be very volatile and directional with interest rates. We know that the market is less liquid, and that obviously matters from a liquidity perspective. What we’re always trying to do is put ourselves in a position where we’re never being obviously forced to de-lever. We always want to manage our liquidity position such that when we get to extremes in interest rates and spread, you’re still comfortable holding positions.
That doesn’t mean that we’re not going to make decisions because, at those times where we think there’s still–you know, the environment is changing, but from where we sit right now, we’re in a really efficient position from a capital position, and you can see that in the percent of unencumbered that we have. That gives us a lot of flexibility to operate with higher leverage and still be–still have a liquidity position that’s consistent with where we’ve operated historically. We’re always trying to refine and improve the efficiency with respect to our capital position and our unencumbered, so we’re able to operate with incrementally higher leverage with, in a sense, the same amount of unencumbered capacity to withstand these episodes that the market does go through, where you have sort of gaps in bids and volatility spikes, and you have to be able to endure those environments.
Now what we’re learning is they happen, they’re going to continue to happen, but also if you’re well positioned for them, you can wait it out and ultimately the market will return back to normal levels, and that’s what we’re seeing now. It gives us greater confidence going forward, and we’ll be able to adjust our leverage position accordingly for that.
Eric Hagen: Yes, thank you guys so much.
Peter Federico: All right, thank you. Take care.
Operator: Ladies and gentlemen, we’ll conclude today’s question and answer session. I’d like to turn the floor back over to Peter Federico for any closing comments.
Peter Federico: Again, thank you all for participating on our call today, and we look forward to speaking to you all again at the end of the first quarter.
Operator: With that, ladies and gentlemen, we’ll conclude today’s conference call. We thank you for attending today’s presentation. You may now disconnect your lines.
