MBS RECAP: The Trend is Still Not Our Friend

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Posted To: MBS Commentary

We've been tracking an uptrend in yields since they bottomed out in mid April. There was some hope that we would see a firmer ceiling take shape heading into May 1st, but the past 4 trading days have seen yields move and hold above the 2.35% ceiling (now looking more like a floor). For what it's worth, today's weakness was more Treasury-specific , as upcoming auction supply combined with a raft of corporate debt issuance to ill effect. It's not that traders didn't already know that auctions were on the schedule, or that various firms might be offering corporate bonds. But when a few more firms than expected offer a few more billion dollars of corporate bonds than expected on a week where traders are already coping with supply from the auctions, traders sell first and ask…(read more)

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