MBS RECAP: Bonds Break 7-Day Winning Streak… Convincingly


Posted To: MBS Commentary

First, let's talk about how big today's sell-off was. In terms of 10yr yields, it fully erased the past 2 days of gains and some of the improvement seen last Friday. 10s were up nearly 9bps to 1.737%. From a technical standpoint, yields firmly rejected a break below the 1.67% level (something that looked like a decent possibility with yesterday afternoon's technical 'test' ). Whereas MBS underperformed with yields moving lower yesterday, they outperformed with bonds selling-off today. Even then, Fannie 3.0s shed nearly 3/8ths of a point and the average lender repriced 1-2 times. Why is the bond market so cranky? The aforementioned 7-day winning streak has something to do with it. The longer and stronger such streaks are, the bigger and more certain a token technical rebound…(read more)

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