There has been a big rally in corporate bonds in the past few months. Decreasing fears of defaults has sparked a huge inflow of money into these bonds. The U.S. corporate bond market is large, with $9.8 trillion in outstanding debt – 1.5 times the amount of outstanding Treasuries, or about 70% of the nation’s GDP.
According to Federal Reserve data, the U.S. mortgage market is even bigger – $14.7 trillion at the end of 2008, of which $8.2 trillion is securitized. The three government agencies Fannie Mae, Freddie Mac and Ginnie Mae now back 90% of mortgages.