MBS Day Ahead: Glimmer of Bond Market Hope Ahead of The Inevitable

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Posted To: MBS Commentary

The extent to which the tax bill is "inevitable" remains to be seen, but at the moment, financial markets are still treating it as "highly likely"–just not as inevitable as yesterday around noon Eastern. Since then, we've learned that the growth "triggers" (discussed as a way to gain the votes of GOP deficit hawks) will not work under the current rules of the Senate. As such, we're basically waiting to see what their workaround will be. Overnight treading reflected the pause in tax bill bullishness and leaves bonds on the upper edge of their recent range (in terms of yield). That's BETTER than yesterday , considering we'd broken above that upper edge. Let's call it 2.4-2.42–a narrow band of yields that I've been referring to as the "danger…(read more)

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