MBS RECAP: Bonds Tank; Yields Surge Past 2014 Highs

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Posted To: MBS Commentary

July 8, 2011. That's how far you'd have to go back to see higher 10yr yields than we saw today. At their worst, they were at 3.0945% . At the close, it doesn't look like they'll be much better (currently trading in the 3.07+ range). Up until today, the high had been 3.04%, both 3 weeks ago and on Jan 2, 2014. When rates spike to the same high level that many years apart, it only reinforces the technical significance of that level. Thus, any break above 3.04% was likely to result in a significant amount of follow-through, and that's really what today was all about. It only took moderate weakness overnight to get bonds within striking distance. From there, an as-expected Retail Sales report did the rest of the trick. But why did we get hurt so bad if Retail Sales was merely…(read more)

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