In one asnwer to a question, it was said that one should not hedge against spread (OAS) widening. The spread is a risk premium for holding mortgage securities and should not be hedged.
Cant seem to understand why we its not logical to hedge?
if spread widens (i.e. mort sec rate increase), your mort sec price declines
if spread narrows, your mort sec value increases — a benefit you will give up if you hedge the price decline of widening
the book mentioned this fact.