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Knee-Jerk Weakness Looking Mostly Resolved; Risks Potentially Reversing
Posted to: Micro News
Wednesday, May 21, 2014 2:27 PM
As hoped and alluded to in the previous alert, bond markets were indeed able to bounce after the initial knee-jerk into weaker territory following the FOMC Minutes. Buyers have been fairly cautious about coming back to the table, but less so in MBS.
Fannie 3.5s are already back to the highs of the day at 102-15. This eliminates any concern over negative reprices and tips the balance toward positive reprice possibilities for some lenders (not the kind of thing we should expect to see right away, but holding or improving upon these levels increases the odds).
10yr yields were as high as 2.555 briefly and are now back down to 2.543.
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