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MBS RECAP: Have MBS Finally Reached The Limits of Outperformance vs Treasuries?

Posted To: MBS Commentary

Have MBS Finally Reached The Limits of Outperformance vs Treasuries? Bonds are in the throws of an extended negative momentum move that's been in place throughout October. At times, stimulus-related headlines have accounted for volatility during this move. MBS have been outperforming decisively during this time. That makes it easier for lenders to avoid raising rates nearly as quickly as the broader bond market suggests. But spreads are now at all-time "tights" (maximum MBS outperformance) thus increasing the risk that negative momentum in Treasuries will increasingly translate to MBS. Econ Data / Events 20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th) Markit PMI Composite 55.5 vs 54.3 prev Markit Manufacturing PMI 53.3 vs 53.4 f'cast Markit Services PMI 56…(read more)

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