MBS RECAP: Mortgages Handily Outperform Treasuries

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Posted To: MBS Commentary

Bond markets began in slightly weaker territory and kept losing ground Most of the losses were in by 10am as corporate issuance became the trade of the day This affects Treasuries much more than MBS, although MBS still lost a fair amount of ground Today was all about corporate issuance for bond markets. Economic data, oil prices, stock prices… None of it mattered next to the roughly $20 bln in new corporate bonds. The easiest way to think about the role of corporate bonds with respect to the mortgage market is that corporate bonds are just another seller the same marketplace where originators are trying to sell their MBS. A greater supply of bonds means lower prices for all bonds, all things being equal. In addition to the supply consideration, corporate bonds also directly affect Treasuries…(read more)

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