Rates Are Changing The Rules in The Middle of The Game
You know the part in the movie with the plot twist where the good guy is actually a bad guy? That's not exactly what the bond market's inflation narrative has done to the mortgage community, but it's close enough to feel that way. Cooler inflation was supposed to usher in a trend toward lower rates, but just when the 2nd consecutive CPI report suggested that cooling was well underway, rates are suddenly more concerned with other "stuff." Evidence for that continued to roll in this morning as 10yr yields hit 2023's highs.
Unchanged overnight through 7:30am ET. Weaker since then. 10yr up 4.3 bps at 4.203. MBS down 10 ticks (.31) in 5.5 coupons.
Decent rebound after 10am. MBS down only 6 ticks (.19) and 10yr up .6bps at 4.166.
Mid day recovery waning. MBS down 10 ticks (.31) and 10yr up 2.5bps at 4.185.