MBS Day Ahead: Running Out of Ways to Say "Sideways"
Posted To: MBS Commentary
Tossed coconut salad… Fresh coconut milk… New England boiled coconut… There were only so many menu choices for Yosemite Sam working with one ingredient. We're in a somewhat similar position over the past month with nothing to observe apart from a range-bound bond market. But whereas coconuts might make someone crazy eventually, who's going to complain about an incredibly narrow trading range just above all-time low bond yields? The only thing to complain about in this situation is simply the uncertainty regarding the next big move. Are rates going to break higher or lower? And when will that happen? For the foreseeable future, we can make strong cases that argue against a big break in either direction. Bonds would have a tough time plummeting to new all-time low yields considering…(read more)