MBS RECAP: OK, How About Now?

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Posted To: MBS Commentary

Gigantic bond rallies resulting in all-time rate lows have some side effects. One of them is that we subsequently find ourselves wondering if each reasonably big sell-off is the beginning of the end of the super low rates. On any other day, a 5.3bp increase in 10yr Treasury yields would be inconvenient, but not downright troubling. Today, however, it starts the clock ticking on a mystery that will only be solved by several more days of trading activity. A similar clock started on Monday afternoon. Earlier that day, yields and mortgage rates hit more new all-time lows, but began giving back gains in the afternoon. We asked the same question (about good times being over) then, but concluded "probably not"–at least not based on anything that happened on that particular day. Today's…(read more)

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