MBS Day Ahead: Clearly Defined Floor and Ceiling For Now

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Posted To: MBS Commentary

In the day just passed, the Treasury complex came under pressure on several fronts. Trade related headlines sapped some of the safe haven demand, as did political progress in Italy. Europe continued to have an influence into domestic hours after an ECB member commented on the market's overblown expectations for a September rate cut and additional stimulus. Finally, a poorly received 7yr Treasury auction underscored the need for bonds to tap the brakes this week. In the day ahead, we will keep a close eye on the levels that have coincided with bonds tapping the brakes as well as those where they have taken the metaphorical foot back OFF the brakes (i.e. short-term ceilings where bond buyers have stepped back in). Both have become much more clearly defined this week as we've had THREE…(read more)

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