MBS RECAP: Bonds Scramble Back to Unchanged, Leaving Outlook Cloudy


Posted To: MBS Commentary

Treasuries and MBS have spent the past 2 days trading well inside the range set by last Friday's volatility (big rally following CPI data). Unfortunately, the central tendency during those 2 days has been toward moderately weaker levels. This casts some doubt on what looked like a clear signal on Friday, but it's too soon to rule out additional gains based on today's trading. After all, bonds did manage to make it back to unchanged in many cases. Fannie 3.5 MBS were perfectly unchanged and 10yr yields ended the day just barely into positive territory. Things looked more bleak around 9am this morning when bonds had taken a noticeable turn toward weaker levels. There were no clear fundamental justifications for the movement at the time (import price data was 20 minutes before the…(read more)

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