Beware The False Hope in MBS Today
MBS ended up with a nice little rally after 2pm that brought prices 3/8ths higher. Treasuries, on the other hand, set new long-term yield highs today. The latter is where we would continue to look for general guidance on rate trends. That's not to say 10s are destined to break above 4% and keep rising (totally possible, but not a given)--simply that the gains in MBS are specific to MBS (in case that wasn't already obvious). Today's video talks more about the outperformance and the broader rate considerations. There's a lot going on (in case that wasn't already obvious).
- Durable Goods
- -0.2 vs -0.4 f'cast
- Core Cap-Ex (non-defense, excluding aircraft)
- 1.3 vs 0.2 f'cast
- FHFA Home Prices
- -0.6 vs +0.1 prev
- Consume Confidence
- 108 vs 104.5 f'cast
- New Home Sales
- 685k vs 500k f'cast
- Durable Goods
Token recovery overnight, no reaction to Durable Goods, and now selling off a bit as bonds follow UK markets. 10yr still down 6.5bps at 3.864 and MBS up 11 ticks (.34), but down more than a quarter point from the highs.
Gains mostly gone now with yields led higher by a sell-off in EU bonds. MBS down 5/8ths intraday and up only 6 ticks (.19) from y'day. 10yr yields down only 3bps after being down more than 12bps at the best levels.
10yr in negative territory, up 3.5 bps at 3.966 and UMBS 5.0 still up almost an eighth of a point.
Decent little bounce off the PM lows for MBS--now up more than 3/8ths on the day. 10yr still 2.7bps higher at 3.955. No obvious catalyst. 2pm is more prone to volatility than the noon-2pm window.