MBS Day Ahead: Checking in With “Longer-Term Trend”

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Posted To: MBS Commentary

I talk quite a bit about the " long-term trend " or the "longer-term trend" these days. It most frequently comes up in some iteration of the following: "until the long-term trend has been clearly defeated," etc. But what exactly are we talking about? The following chart has several iterations. TOP: This is the most relevant of the 3 for the lock/float outlook. It leaves some room for corrections that take rates back to the lower boundary, but there's no guarantee we'll hit the lower end before we return to the upper end. MIDDLE: This is what I would consider to be the general counterattack leading back from the all-time lows in 2012. Yes, yields did move a bit lower (to new all-time lows) in 2016, but I tend to view that as a temporary divergence due to…(read more)

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