Coming into the week, there were some technical considerations regarding the recent losing streak in stocks and winning streak in bonds. These serve as a backdrop for this morning's economic data and resulting market movement.
In short, both trends run the risk of bouncing today, especially in the event of stronger Retail Sales, and this is exactly what's happening so far. Correlation continues to be strong between stock prices and bond yields with both putting in their domestic session highs and lows at the same times.
It hasn't been a straight shot though. MBS started weaker, managed to bounce back into 10am, and then fell back to the lows by 11am. If it's some small solace, prices haven't yet broken into new lows, nor have Treasury yields broken to new highs (both have simply matched the weakest levels from earlier in the morning).
For MBS, the losses are right on the edge of negative reprice risk, but probably not big enough for most lenders to consider it.
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