MBS RECAP: Bond Rout Kicks Into Higher Gear

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Posted To: MBS Commentary

The first day of a new month always holds opportunities and risks for rates. Investors who were compelled to hold certain positions through yesterday are suddenly more free to move about the cabin. In today's case, most of them jumped out of that cabin! There were some moments of reasonably flat trading earlier this morning, but as soon as the NYSE opened at 9:30am, it was essentially a sell-a-thon for the rest of the day. In part, this speaks to the increased prevalence of bond-related ETF trading in recent years. Specifically, it suggests heavy selling of those ETFs by money managers, speculators, and hedge funds. For a more general idea of why things are so bad, here's a useful paragraph from the daily Ratewatch article on Mortgagenewsdaily.com: What's up with all the recent…(read more)

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