MBS RECAP: Bond Rally Continues In Spite of Supply

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Posted To: MBS Commentary

Bonds strong overnight with more help from Europe 10yr Auction strong this afternoon with massive foreign support 1.52-1.62 range in 10yr yields already potentially being tested on the low end after a bounce off the high end on Monday morning. MBS gain roughly a quarter point in Fannie 3.0 Rates near 2-week lows (themselves only 1 or 2 rate sheets away from 5-week lows) When we talk about "supply" in bond markets, we're primarily concerned with two big players: the US Treasury and businesses. The latter is responsible for several recent years of record issuance in corporate bonds with 2016 on pace to be another record. Corporate bonds are similar to mortgage-backed-securities in the sense that investors are receiving a bit of extra compensation (aka "yield") beyond risk…(read more)

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