MBS RECAP: Good News and Bad News After Today’s Insane Rally


Posted To: MBS Commentary

Yes, I'm going to call a 13bp gain in 10yr yields an insane rally, because who would have logically conceived of such a thing in the current market? Sure, it wouldn't have been hard to imagine 6, 7, or 8bps of a bond market surge in response to some significant event, but 13bps is the biggest intraday move since Brexit, and beyond that one of 5 biggest moves in the past 7 years. How did it happen? Both stocks and bonds were pushing their technical boundaries in terms of being overbought and oversold respectively. The shine had already begun to come off the stock rally as of last week, but so much that it had a spillover effect for bonds. In fact bond yields continued to spike on Friday even as stocks swooned. Chalk that up to pent-up "new month" tradeflow momentum that was…(read more)

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