MBS Day Ahead: There’s Something About 2.50%


Posted To: MBS Commentary

2.50% has been more than just a reasonably round number marking the midpoint between 2.0% and 3.0% as far as 10yr Treasury yields are concerned. Actually, I take that back. That's exactly what it is, and that's exactly why it's been important in the big picture. The first mega-rally for bonds back in 2008 started when yields were well above 3.0%. In a single week, they moved from 3.75% to 2.98%. After breaking below 3%, the quickly proceeded almost all the way to 2%., but notably bounced right at 2.5% for several days. Ever since then, these big psychological levels have given investors pause. In other words, rallies and sell-offs have clearly tended to slow down when approaching 2.0% or 3.0%. That makes 2.50% an important line in the sand. It can play the role of "resistance…(read more)

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