Posted To: MBS Commentary
Yesterday we discussed the positive impact of month-end bond buying . The only problem with month-end buying that occurs on the day before month-end is that it can leave an imbalance of sellers on the last day of the month. This is a bit counterintuitive because there's a tendency to view month end buying as the overall bond market needing to hold certain levels to meet month-end index values ( read the link if you're not sure what I'm talking about). In practice, that's not how it works at all. Month-end index extensions provide cues for a certain subset of traders to hold a certain mix of bonds. Once they've bought enough bonds to achieve that mix, they're out. They no longer need to buy or sell for month-end purposes. So if most of those traders get most of their...(read more) Forward this article via email: Send a copy of this story to someone you know that may want to read it.
from Mortgage News Daily http://ift.tt/2gVjE11
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