MBS RECAP: 2018 Comes Out Swinging

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Posted To: MBS Commentary

Bond markets have had worse days , but the average day is definitely better than today. 10yr yields moved more than 5bps higher, bringing them to 2.462%, just shy of the important 2.47% technical level. Just to show they weren't afraid to test those waters, intraday yields were as high as 2.4815. Fannie 3.5 MBS (the coupons with the most relevance for mortgage rates) fared much better, losing only 5/32nds of a point (in price) versus a comparable loss of half a point for 10yr Treasury notes (again, in PRICE, not YIELD). There were no significant economic reports or market moving headlines in play. All of the drama came courtesy of incidental "new year" trading. This can include things like money managers making portfolio adjustments after being forced to show a certain balance…(read more)

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