MBS RECAP: Bonds Confirming Momentum Shift

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Posted To: MBS Commentary

Bonds were weaker overnight, weaker during the AM hours, and just for good measure, weaker again in the afternoon. When the dust cleared, 10yr yields had risen nearly 9bps and Fannie 3.0 MBS were down more than a quarter point (Fannie 2.5 coupons more than half a point). Surely, there must be something big and obvious to drive such a move! Was it some sort of trade war tweet, a big central bank speech, or an important piece of econ data? The 3 distinct stages to the selling would be our first clue that we were NOT dealing with one of those huge, singular, convenient, logical market movers. If we could only blame one thing for today's pain, it would have to be "technicals." That's saying something (for me, anyway) because I greatly hesitate to pin big market moves on technicals…(read more)

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