MBS RECAP: Uneventfully Holding Gains Despite Headwinds

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Posted To: MBS Commentary

MBS and Treasuries both relatively flat on the day; light volume too Boston Fed's Rosengren struck a hawkish tone (headwind #1) Corporate bond issuance was active (headwind #2) Neither headwind did lasting damage to bond markets, but the Rosengren effect was noticeable The day presented some headwinds for bond markets, with corporate bonds being issued at a healthy pace. As a reminder, corporate debt creates additional supply in the bond market, competing with other bonds (like MBS and Treasuries). That competition can weigh on prices , as can some of the corporate bond hedging strategies that rely on selling Treasuries. Against that backdrop, bonds had a hard time making it very far into positive territory, but they held their ground with aplomb. In addition to the general weight of corporate…(read more)

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