MBS RECAP: Bonds Make Case For a Comeback

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Posted To: MBS Commentary

By the end of last week, although there was potentially a sliver of hope afforded by Friday's highs being slightly lower than Thursday's, it looked like bonds were punching out of the massive 2019 rally and embarking on the new trend toward higher rates. But the new week of trading has increasingly called that conclusion into question. Granted, there were a few other reasons to hold out hope over the weekend (trade deal backtracking, temporary trepidation about new bond issuance, the technical ceiling at 1.94% potentially acting as a buying cue, and the chance that the weakness was exacerbated by the "3-day weekend effect"), but no one could be blamed for not wanting to catch that falling knife. By moving back down to 1.82%, 10yr yields have already made it clear that a surge…(read more)

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