MBS RECAP: MBS Outperform as Treasuries Continue Correcting

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Posted To: MBS Commentary

Today's most prominent trade was the reaction to the 9:45am Markit PMI data. Several of the metrics were at their weakest levels since 2009. The composite PMI was the lowest since record keeping began. That means that the services sector is starting to sing a similar tune to the already damaged manufacturing sector–at least if we're to take Markit's word for it. Of course, it would require additional confirmation to become intensely troubling. It's notable then, that bonds only rallied a few bps into positive territory before turning around and heading back to slightly weaker levels on the day. While this is consistent with the "correction" narrative that we've been discussing this week, it wouldn't have been crazy to expect a bit more strength in bonds. The…(read more)

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