MBS RECAP: Post-Fed Weakness Brings Bonds Back to The Gap

Posted To: MBS Commentary

To be fair to the Fed, they didn’t really cause most of today’s weakness. Bond markets already showed their hand with respect to yesterday’s Fed events–essentially endorsing the rate hike, the forecasts, and the balance sheet plan as something that could coexist with 10yr yields in the “low 2’s” and/or mortgage rates under 4%. In other words, markets clearly didn’t walk away from yesterday’s Fed events with a clear urge to bounce toward higher rates. Despite pressure from the Bank of England announcement at 7am ET, and strong economic data at 8:30am ET, consolidation seemed to be the name of the game. Although we would have liked to have seen it take place closer to yesterday afternoon’s range, consolidation is still essentially what we got. It ended up…(read more)

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