MBS Day Ahead: It’s Still a Correction Unless The Fed Says Otherwise

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Posted To: MBS Commentary

In the week just passed, the bond market sold off at the fastest pace since the June 2013 taper tantrum. That's a relatively impressive feat at first glance considering the taper tantrum provided a massively obvious, once in-a-lifetime selling cue whereas last week arguably only had a few moderately important negative indicators for bonds. But consider that yields had already risen 60bp from recent lows BEFORE the taper tantrum sell-off compared to roughly 10bps this time around and things make more sense. The more appropriate comparison would be with early 2015 where yields had been trending lower at a linear pace for more than a year before a last-minute acceleration of the rally and a subsequent corrective bounce in early February. Long story short: the nature of the 2019 rally and especially…(read more)

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