MBS Day Ahead: Bonds Fight to Maintain Recent Gains

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Posted To: MBS Commentary

With slightly weaker levels overnight, the rest of the day becomes a fight to maintain the gains seen so far this week. The easiest and most basic observation about those gains is that they've come courtesy of much weaker stock prices. In that sense, it would seem all we need is for stocks to avoid a big bounce, but the overnight bond market movement suggests some caution . This morning's chart is a little "busy," but just focus on one or two of the lines at a time. For instance, notice that the yellow line (10yr yields) begins to move higher overnight even though the blue line (stocks) isn't moving higher nearly as much. That said, if stocks were to fall below yesterday's lows (horizontal blue line at the bottom of the chart), bonds would almost certainly have to…(read more)

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