MBS Day Ahead: There is Inflation, If You Look For It, And It’s Not Helping Bonds

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Posted To: MBS Commentary

This commentary was delayed this morning due to several alerts posted on MBS Live. If you're not a member and haven't checked it out, you should . Bonds are beginning the day with their biggest sell-off since January 2nd, but this one is a bit more disconcerting because it's taking 10yr yields over their 2.52% technical ceiling (hasn't been broken since March 2017). At face value, today's weakness means we can increasingly be convinced that the first major dose of momentum following the big, sideways consolidation of Q3 2017 is toward higher yields. Looking a bit deeper, we can make good sense of this move by breaking 10yr yields down into their inflation-related and inflation-adjusted components. There are good, old-fashioned 10yr yields ("vanilla") which serve…(read more)

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