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MBS Day Ahead: Resilience in Bonds Speaking to Supportive Bigger Picture

Posted To: MBS Commentary

Despite an improvement in COVID numbers, relative optimism in stocks, an ongoing glut of corporate bond issuance, and freshly reinforced realizations about the size of new Treasury issuance in Q2, the bond market has managed to more or less shrug off all of the challenging anecdotes to trade 1-2bps better at the start of the day. This is fairly telling with respect to underlying psychology. Bonds could easily have justified more weakness by this morning, and that weakness would neither have been a surprise, nor would it have even been much of a cause for concern in light of the historically low yield levels. Yet here we are holding ground just under 10yr yields of 0.70% when traders could easily have gotten away with 0.80+ without ruffling too many feathers. Again, this is very telling! While…(read more)

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