The Best Half Point MBS Sell-Off

On probably any other day, a half point sell-off in MBS would be bad news.  And on many days in the past, a half-point sell-off has been VERY bad news.  Today, however, it's arguably a good thing.  This paradox is only made possible by the 2+ point rally that took place after Thursday's CPI data.  Today's flat trading trajectory(after overnight losses) offers some sense of confirmation for last week's rally, but the pull-back from the best levels suggests additional gains will need additional motivation.

Econ Data / Events
    • monthly CORE CPI
      • 0.3 vs 0.5 f'cast, 0.6 prev
    • yearly CORE CPI
      • 6.3 vs 6.5 f'cast 6.6 prev
    • monthly HEADLINE CPI
      • 0.4 vs 0.6 f'cast, 0.4 prev
    • yearly HEADLINE CPI
      • 7.7 vs 8.0 f'cast, 8.2 prev
Market Movement Recap
08:44 AM

Only slightly weaker to start the day.  No distinct trend yet.  10s up 3bps at 3.88.  MBS down 3/8ths of a point. 

11:56 AM

Some weakness in the 10am hour, but holding and recovering slightly now.  MBS back to 3/8ths lower on the day after being down half a point.  Treasuries right in line with previous levels as well (3.88).

04:12 PM

Very flat and boring in the bigger picture.  The best and most boring half-point sell-off we can remember.  10yr still within a bp of AM levels at 3.872. 

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