MBS Week Ahead: Bigger Picture Trend Toward Consolidation

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Posted To: MBS Commentary

Limited data and events this week to motivate strong momentum broader trend looking like a consolidation pattern first major break out of that pattern could be big Conventional wisdom held that the Fed's December hike would be merely the first phase in a gradual move toward higher rates across the curve (meaning both shorter term and longer term yields, like 10yr Treasuries and mortgage rates). With that in mind, it's an interesting turn of events, to say the least, that 10yr yields are roughly 50bps lower than when the Fed hiked in December. The Fed rate hike outlook is part and parcel of rates' ability to defy expectations. Markets have gone from seeing 4 hikes in 2016 (as of late last year) to 2 hikes a few months ago to 0-1 hikes today. Will that trend continue until no one…(read more)

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