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MBS Day Ahead: Why Are Bond Yields Surging Today?

Posted To: MBS Commentary

For days–and especially since last Friday–we've been increasingly worried that the 2-month bond rally was running out of steam and at risk of a reversal. The jury was technically out until all of our overhead ceilings were taken out. As of this morning, they are. The following chart has the exact same trendlines that I've been posting for weeks although I added a new horizontal level (actually an old one) at .64% and another blast from the past at .69%. These are the next 2 stops on the pain wagon should it continue to roll. But why is it rolling in the first place? Are bonds freaking out because of the overnight approval of a Russian covid vaccine? That's certainly the narrative, and it would be very easy to blame the vaccine and move on. But consider a few things before jumping…(read more)

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