MBS RECAP: Bonds Back to Weaker Ways After 1-Day Break

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Posted To: MBS Commentary

Yesterday was nice while it lasted. Against a sea of redness, it stood out like a beautiful green shoreline. Unfortunately, that shoreline turned out to belong to an island and that island was quickly swallowed up by the angry red sea. OK, so it wasn't quite that dramatic, but close! The weakness began right at the start of the overnight session as the yield curve (and 10yr yields for that matter) bounced at technical resistance. We were worried about this after yields failed to break below 2.615% yesterday but not reading too much into it at the time. After all, we didn't want to press our luck with several bps of gains already on the board. It only made sense that bonds would take their time if they were trying to mount a buying offensive. 2.615 was the first bounce seen in the overnight…(read more)

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