MBS Day Ahead: Increasingly at Risk of a Bad Bounce in Bonds


Posted To: MBS Commentary

"Bad" is a relative term, but momentum may be shifting Today's trading will be pivotal in determining that The stakes are not too high, for now Bond markets have been enjoying a good run since the last Fed meeting, with rates moving almost exclusively lower . In fact, we haven't had one single instance of rates moving higher for more than one day at a time. To make matters even less threatening, mortgage rates have been even more stable than normal versus 10yr Treasuries–a fact we can attribute to the impact of corporate bond issuance on Treasuries as well as the typically sluggish response to market movement often seen when rates are near long-term lows (in other words, MBS prices are moving less than Treasuries, and mortgage rates are moving less than MBS prices). Whether…(read more)

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