The focus of the week for MBS and rates should be on the fact that we made it to levels not seen since the end of October 2013. With 6 out of the last 7 days taking rates into better territory--not to mention with the utter defiance of last week's big NFP beat--it's only fair to expect a modest correction to big, strong winning streaks.
That's just what we had today as Fannie 3.5s and 4.0s are only off 6 and 3/32nds respectively heading into the last few hours. Treasuries were slightly higher in yield, but ended up closing under a short term technical level at 2.625.
There were no significant market movers in play today, leaving markets to act purely based on tradeflows and technicals--an ideal opportunity for the type of correction we saw. The only risk is that today is also consistent with a broader correction to April's strength. That could make next week challenging, especially if the economic data is stronger.
Join Now or Login to Post Comments