MBS RECAP: Rapid Rate Hike Expectation Adjustments Punish Bond Market


Posted To: MBS Commentary

The past 2 days have been almost exclusively about a rapid adjustment in Fed rate hike expectations (see the chart in the Day Ahead for a visual). That's a point worth emphasizing considering how much anticipation markets were carrying heading into last night's Trump speech. To be fair, the speech didn't help bonds, but as MBS Live members can see in the attached video recap, it only added a few bps of weakness to a sell-off that pushed 10yr yields 13bps higher in less than 24 hours. This morning's economic data stood some chance to help stem the tide of selling momentum in bonds, but both of the key reports were in line with expectations or stronge r. At 8:30am, slightly weaker consumer spending figures were offset by a rise in PCE prices and incomes. In separate data, ISM…(read more)

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