MBS RECAP: Light Volume Snowball Rally For Treasuries. MBS, Not So Much

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Posted To: MBS Commentary

There were no significant scheduled events in the offing today. Volumes were down sharply in the bond complex as well (less than 50% of recent highs). That made for a bit of a slippery slope of illiquidity as last week's short positions were flushed out and day traders chased a few big options trades. If there was actual underlying inspiration, the best case to be made was for general global growth anxiety with a growing list of anecdotes providing cause for concern rather than hope. All of the above helped Treasuries rally sharply , with 10yr yields making it as low as 1.628% by the afternoon and officially closing at new multi-year lows. MBS, on the other hand, had a downright frustrating day. They were generally unable to take part in the rally. Fannie 3.0 coupons struggled to return…(read more)

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