MBS Day Ahead: For Bonds, It’s Still “Duck and Cover”


Posted To: MBS Commentary

2018 has seen the most unpleasant start to a new year since 2009 as far as bond markets are concerned. The big sell-off in 2009 is easier to reconcile as a correction to an even sharper move to lower yields as the financial crisis officially hit Treasury yields. This time around, the selling is occurring in a much scarier way. Whereas 2009 marked a correction to a longer-term downtrend, 2018 is more of an acceleration of a preexisting uptrend. In the shorter-term, the momentum has been fairly relentless . The pace has been fairly gradual compared to other moves of equal size. That's bad. Gradual moves tend to have more staying power. Although bounces can materialize any time, there's no solid indication of that happening just yet. Just last week, 2.885 emerged as a potential ceiling…(read more)

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