MBS Day Ahead: Without Another Win, Clouds Increase Over Bond Market

Posted To: MBS Commentary

Bond markets are currently in a sort of disheartening position. The Fed rate hike means that most rates should move higher, even if that happens with various combinations of steps forward and backward for longer term rates like 10yr Treasuries and mortgages. The longer the economy endures the new Fed Funds Rate, the more mortgage rates will have to play along with the "rising rate environment." I wouldn't be surprised to see a sort of "aha moment" play out in markets in the coming months where an initial illusion of economic endurance results in a somewhat quicker move toward higher rates than we've seen so far. Whether or not that happens, the endgame continues to be a shift toward economic deceleration. The only questions are whether we have that "aha moment"...(read more)

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