Sometimes the 2nd day of a big geopolitical move will spiral into a volatile blaze of glory. Other times, it's like today.
Bond markets are calmly marching to slightly weaker levels. The same narrow trend has been intact all morning. It began PERFECTLY in line with the 8:20am bond market "pit" open. It was reinvigorated by stock market strength. Global markets are simply trading in a "risk-on" direction (stock prices and bond yields higher) after yesterday's big "risk-off" move.
As expected, the recent underperformance of MBS is allowing them to stand stronger in the face of broader bond market weakness this morning. For instance, MBS have given up just UNDER half of yesterday's gains while Treasuries have given up just OVER half of theirs.
Overnight, Treasuries were more volatile. 10yr yields made highs at 2.494. 10's are currently at 2.4836. We'll be watching to see what happens if they make it back to that overnight high (also yesterday morning's low). On a break higher, the next technical target would be 2.51. More importantly, it would likely push MBS into widespread reprice risk territory.
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