MBS Day Ahead: Brexit Headlines vs Retail Sales

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Posted To: MBS Commentary

Yesterday saw bonds undo a decent amount of overnight progress to end at the highest yields in nearly a month. 10yr Treasuries broke above the 1.75% level. If they close above 1.75% again today, it would add validity to the weaker trend of the past 2 weeks. Trade headlines helped at first but Brexit headlines led the reversal. Bonds will continue sorting out the relative impact of Brexit anticipation compared to domestic economic data as we get the week's only significant report: Retail Sales. As frustrating as it may be, we're quickly finding ourselves in a position to give geopolitical events MUCH more sway over market movement than we would have just 2 weeks ago. It's frustrating because after the last Fed meeting, the bond market thesis has been something like this: "keep…(read more)

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