MBS RECAP: Bonds Back on Fence to Begin October

Posted To: MBS Commentary

Almost like clockwork, bond markets weakened JUST enough to cast doubt on their commitment to reentering the sub-1.60% range. This follows a week of trading (as seen in the following chart) where yields remained below that ceiling almost exclusively. To be fair to "the range," there had been times during the past few months where we saw yields get this high (in the 1.62-1.63 area) that did NOT end up spelling doom for the overall stability of the range. In other words, bonds didn't weaken quite enough for us to conclude they are definitely moving up and out of the range. The assessment of today's closing levels might not be so equivocal had it not been for the reaction to this morning's ISM Manufacturing data . The last instance of this report was a fairly big deal as...(read more)

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