MBS RECAP: Bonds Officially Break Out Of The Range


Posted To: MBS Commentary

Over the past 3 days (the white circled area in the chart below), rates have broken out of their post-election consolidation range (the outermost yellow lines in the chart). Today's weakness was partially driven by overnight market movements in Europe. German Bunds closed at their weakest levels in several weeks ahead of tomorrow's European Central Bank (ECB) announcement, thus adding some pressure to Treasuries heading into the domestic hours. While it's tempting to lean on the familiar old culprit of European bond markets to explain Treasury/MBS gyrations, the latter has been in the driver's seat since the election and December Fed meeting. US markets have only solidified their right to drive with last week's rapid repricing of Fed rate hike probability beginning on Tuesday…(read more)

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