MBS Day Ahead: Bonds Set to Spar With Key Yield Ceiling

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Posted To: MBS Commentary

In the day just passed, bonds digested and reacted to the minutes from the latest Fed meeting (from late July). Given that the Fed cut rates at that meeting and that many speakers have made themselves clear, there wasn't much left to be gleaned from the minutes. Still, there were takeaways for both bond buyers and sellers. Buyers were a bit more keen right out of the gate, but sellers controlled the afternoon as the most notable feature of the minutes was an absence of firm commitment to additional rate cuts. In the day ahead, bonds will get a chance to test their mettle against an important overhead ceiling at 1.62% in 10yr Treasuries. Granted, MBS (which we care about most) haven't been following Treasuries in lock-step, but the latter has been and will continue to be the most relevant…(read more)

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