MBS Day Ahead: Bonds Fight to Hold The Range as Auction Cycle Begins


Posted To: MBS Commentary

We've been tracking several iterations of a sideways or consolidative range since the initial post-election sell-off bounced back in mid January. We say "post-election" sell-off, but it's really the post-FOMC sell-off. December's highs were driven by the Fed's updated economic projections . Everyone assumed they would hike, but their future rate hike expectations suggested markets weren't quite keeping pace with potential reality. The same could be said for last week's bond market weakness. In fact, it WAS said by Vice Chair Fischer on Friday when he quipped that there had been a conscious effort to influence the market's rate hike expectations. There can't really be any firmer evidence of an impending rate hike next week, and markets have certainly…(read more)

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