MBS RECAP: Bonds Almost Perfectly Unchanged in Q1

Posted To: MBS Commentary

Month/Quarter-end bond buying was nowhere to be seen until today. It can provide a mild but determined positive trend in bond markets that transcends economic data. Case in point, Core PCE was +1.8 vs a +1.7 forecast today and bonds began losing ground immediately following the data. Less than half an hour later, the weakness abated and both Treasuries and MBS embarked on a slow, steady journey into moderately positive territory. Before the positivity kicked in, it looked like there was a decent chance that Q1-2017 would end at exactly the same levels as Q4 2016 (just over 2.43%). Even then, it would be fair to characterize Q1 as " almost perfectly unchanged " for longer-duration bond markets. The "longer-duration" distinction is important because shorter-duration bonds...(read more)

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