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MBS RECAP: Much-Anticipated Correction Finally Arrives. Now What?

Posted To: MBS Commentary

Much-Anticipated Correction Finally Arrives. Now What? This morning's alert noted a scary scenario playing out in bonds due to a confluence of big picture negative motivations (power shift in D.C., ruminations about Fed tapering, brighter covid/econ outlook as vaccines roll out, and the general need to correct the extended stay in a record low range). Just as it makes sense for bonds to push back against months of sub-1% yields in the bigger picture, it also made sense that bonds should be pushing back on the shorter term selling spree that accounted for a quick spike of more than 30 basis points in 10yr yields by this morning. As of this afternoon, we finally have the first evidence of such a push-back. It remains to be seen whether it's the start of any additional friendly momentum…(read more)

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