MBS Day Ahead: Yesterday’s Weakness Expands the Range

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Posted To: MBS Commentary

Yesterday was a big, bad day for the bond market with the hotly-anticipated ISM Non-Manufacturing data coming in much stronger than expected. Bonds confirmed their focus on the econ data with heavy volume and heavy selling. Yields ultimately hit the highest levels since the mid-September spike–something that felt "too fast, too soon" at the time. This time around, yields have been plodding higher for weeks. After a surge in volatility over the past 5 trading days, yesterday brought yields right back to that plodding uptrend. Yesterday's yields also force us to expand the range we've been watching. This is a normal occurrence because markets rarely follow the trend-lines suggested by the first few highs/lows in a trend. The adjustment is fairly moderate (barely noticeable…(read more)

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