MBS Day Ahead: Are Bonds Only Holding Ground Because It’s Month-End?

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Posted To: MBS Commentary

Month-end means bond traders are adjusting portfolios to match a published index The index was a bit less friendly than expected yesterday, and bonds bounced That bounce gives us a good target to watch for rallies Things have been going fairly well for bond markets over the past few days, with Tuesday's post-Yellen rally being the biggest potential turning point. Before that, Treasuries and MBS had been in a mostly-sideways pattern, potentially running into resistance at middle-of-the-road trading levels. But after the Yellen-inspired rally, we've had a hard time making new progress. This begs the question: did month-end bond buyers simply use the Yellen speech as justification to buy early and will we now have a tougher time making additional gains? We've discussed the effects…(read more)

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