MBS RECAP: Bond Market Threatens to Turn The Car Around


Posted To: MBS Commentary

It's only fitting to throw in a vacation-themed reference on Labor Day week. Unfortunately, only the metaphor is lighthearted. It's underlying message is a bit more troubling–potentially, anyway. As far as we could see this week, the summertime fun was still in full effect as of yesterday. It would be an overstatement to say the mild Treasury weakness was a cause for concern. It was especially forgettable in light of strong MBS outperformance and equally strong rate sheets. Things changed today, and quickly ! Overnight news regarding newly scheduled US/China trade talks sent yields moderately higher overnight. Domestic economic data did the rest of the damage with every report that mattered coming in stronger than expected. Of these, the ISM Non-Manufacturing data was the worst offender…(read more)

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