In general, Treasuries--or better yet, 'overall bond market momentum'--leads and MBS follow. But it does happen the other way around sometimes. Today is one such occasion. MBS are outperforming and have made a much more steady comeback compared to Treasuries after both were in weaker territory in the first few hours of trading.
The disparity between the two is a multi-faceted issue. Treasuries are a bit more closely tied to equities, which did not continue to fall after 10am. Treasuries are also directly involved in the corporate debt hedging thought to be driving some of the broader momentum in bond markets. MBS meanwhile, are more able to march to the beat of their own drum.
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