MBS RECAP: Bonds Battle Back to Unchanged After Auctions

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Posted To: MBS Commentary

We were hoping to see some traction for bond markets after today's Treasury auctions, and we got it! Unfortunately, the overnight session pushed yields to the highest levels in more than 2 years before the domestic session began. In other words, we had a deficit to make up from the outset. Part of the weakness was attributable to a sharp rise in oil prices thanks to the non-OPEC addendum to last week's big OPEC production cut deal. This involved OPEC meeting with non-OPEC countries and agreeing to more production cuts. Saudi Arabia surprised markets by announcing additional cuts (on top of what the OPEC deal required). The other part of the overnight weakness was attributable to volatility at the start of European trading hours. As domestic trading got underway, bonds began to recover…(read more)

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