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MBS Week Ahead: Case For Volatility Continues to Build

Posted To: MBS Commentary

We knew that bonds would be forced to accept more volatility in October, if for no other reason than September's progressive and ultimately complete absence of volatility. The new month has not disappointed in that regard, although the trading levels are a bit of a disappointment for those who'd prefer rates to always be at all-time lows. Fortunately for them, there's been a massive amount of MBS outperformance. Coupled with lender margins that are still extremely wide, mortgage rates haven't had to experience anywhere near the level of weakness seen in Treasuries over the past 4 weeks. With one week left to trade in October, should we expect to see the prevailing trend continue? That depends on the news that hits, as well as the extent to which traders have positioned for a…(read more)

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