dialogue...
Random Blog Reader: Dudes! I'm way confused... When I told you I was watching the 10yr Tsy last year for mortgage rate indications, you lit my house on fire and sent the guidos after me.
Matt and AQ: Affirmative
Random Blog Reader: But now it seems like you're always talking about the 10yr! Even seems like you advocate watching treasuries for indications of MBS movement! What Gives!?!?
Matt and AQ: <AQ looks towards MG. MG Nods. AQ Picks up Phone and dials guidos> Have you been paying attention to the blog?
Random Blog Reader: Of Course.
Matt and AQ: Then you should probably go back and do a search for terms like "yield curve," "correlation," "Fed + MBS + Stability," "boring and predictable spread tightening," and the like... BUT! Do it quickly... We anticipate that a large black vehicle with 4 large men in large black suits with large sunglasses may be paying you a visit in 9 minutes and 37 seconds...
end dialogue
Here's the day so far:
The selling in MBS has been stymied for the moment by the 101-00 price level and tsy's by 3.777. Interestingly enough, and the reason the above dialogue was brought into play, is that the last time we saw these levels in either security was in the same millisecond "way" back on June 16th...
Fairly incontroveritible there as far as positive correlation. (In case you're still not getting it... THEY'RE A GOSH-DARN MIRROR IMAGE!)
Crystal Balls?
Overhead tech support extrapolated from the 10 yr futures contracts into current yields suggests 3.82 as a better ceiling than 3.77, and And 3.71 as a floor we'd need to break to get all warm and fuzzy again (21 and 8 day MA's). So, don't freak if we break out soon, which is probable. Reprices for the worse are a threat, unless your lender hedged you all the way to the bar this AM. Does any of this really matter though since none of what we're seeing is a real market until FOMC next week?
2s vs. 10s: 256.49
MBS Market Alerts
