MBS RECAP: No Easy Victories as Bonds Revisit Weaker Levels

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Posted To: MBS Commentary

Last week's bounce at a ceiling of 2.60% (twice, essentially) was enough for some DEFENSIVE hope. In other words, it introduced the possibility of the recent selling trend running out of steam near these levels. But as I cautioned at the time, there were connotations for a strong OFFENSE bringing rates in the other direction. For that, we would have at least needed to break below 2.52% and preferably 2.42% in the bigger picture. With yesterday's bounce at 2.52%, today ended up looking like a natural progression back toward higher levels. There were ample headlines relating to the government shutdown and stop-gap funding bill today. At times, markets appeared to react to these, but those reactions are hard to separate from other trading considerations in play. The 'other consideration'…(read more)

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