MBS Day Ahead: A Second Day of Weakness Would Be a Bad Sign

Posted To: MBS Commentary

Yesterday's moderate weakness in bond markets comes at at inopportune time for those hoping to see another push back to all-time lows (in either Treasuries or mortgage rates). Considering mortgage rates never quite made it to true all-time lows on this last go-round--not to mention the fact that Treasuries are the better spokesperson for big picture momentum --we'll focus on 10yr yields for the purposes of identifying and assessing trends. While we're at it, let's consider German Bund yields too. They're the spokesperson (or 'spokesbond?') for big picture momentum in European bond markets, and have been one of our key sources of recent inspiration. Bottom line, if Bunds are bouncing, Treasuries are that much more likely to bounce. With that in mind, consider the...(read more)

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