MBS RECAP: Mortgages Outperform but Dragged Down by Treasuries

Posted To: MBS Commentary

Treasuries were significantly weaker today as oil, Europe, and equities all bounced higher. The move was led by a reversal in European bond markets in the morning and by a weak 5yr Treasury auction in the afternoon. In fact, until the auction, bonds simply looked to be giving back yesterday's Europe-inspired gains. The fallout from the auction was good for another 3-4 bps of weakness in 10yr yields. MBS held their ground admirably, but more so in the morning hours. Before the auction, Fannie 3.5s and 3.0s had managed to hold inside yesterday's range (Treasuries were already well beyond theirs). All bets were off after the auction. Treasury yields moved sharply higher and MBS couldn't help but be dragged down. For what it's worth, volume remained "holiday light," with...(read more)

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