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MBS Day Ahead: "Flat" is an Understatement. What Changed?

Posted To: MBS Commentary

Recent trading activity lies in stark contrast to the drama seen earlier in 2020. Even at the beginning of June, bonds still had an interesting (and scary, at first) story to tell as yields spiked in response to stronger econ data and coronavirus hopes. Both of those factors remain in play, yet bonds are now back near their best post-covid levels and trading in one of the narrowest ranges ever. What changed? First off, the current coronavirus hopes are different than those in early June. This time around, the hope was only made possible after several states saw exploding case counts in response to decreased social distancing. In other words, things only look good because of how bad they got. Nevertheless, I would still argue that the leveling-off of hospitalizations in several of the hotbed…(read more)

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