What’s Up With The Crazy MBS Sell-Off (and Bounce)?!

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Posted To: MBS Commentary

Just before 11am, we saw a move in MBS like few we've experienced since the financial crisis. WELL before the correlated move in Treasuries, MBS prices began to tank for no apparent reason. Even now, there is still no apparent reason specific to the time of day when it occurred, and it may continue to be a mystery. At times like this, less scrupulous commentators will gather a laundry list of likely suspects and ascribe the movement to those things as if they know are sure. No one is sure. I mean, perhaps one or two large bond traders suspect their actions were part of the move, but other bond traders then jumped on the bandwagon. It began with a mass liquidation of MBS. Sellers were updating their offer prices much more rapidly than buyers were entering bids. Sellers quickly tripped over…(read more)

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