MBS Day Ahead: Huge Jobs Report Guarantees One of Two Clear Messages For Bonds


Posted To: MBS Commentary

It's no secret that the bond market has been on a tear for more than a month. 10yr Treasury yields dropped more than 30 basis points (0.30%) in December alone and quickly added to those gain on the first two trading days of January, dropping another 15bps. All of that strength makes it's own case for a corrective bounce, regardless of economic data. In fact, bonds haven't been this 'overbought' for this long since early 2012 although they were close in early 2016. Either way, we're dealing with the biggest and most meaningful bond rally since the rising rate trend began after the mid-2016 Brexit-driven lows. The longer it lasts and the lower yields go, the more and more likely it becomes that we'll experience a correction. In fact, this correction may have already…(read more)

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