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MBS RECAP: Rates Are In Big Trouble, But Why?

Posted To: MBS Commentary

Huge Mortgage-Specific Weakness The rate reset continues. Just when you thought 10yr yields surely couldn't go any higher, they did. New intraday highs of 1.394% in 10yr yields, and closing near the 1.37% inflection point. MBS aren't happy about it. When rates spike this quickly, MBS typically have to undergo a fast and painful repositioning of relevant coupons. The current iteration has seen 2.5 UMBS take the place of 1.5 coupons in just a few short weeks. But even 2.5 coupons got killed today. Multiple lenders repriced for the worse–some of them more than once. Econ Data / Events Fed MBS Buying 10am, 1130am, 1pm Leading Economic Indicators 0.5 vs 0.5 f'cast Market Movement Recap 08:40 AM Heavy selling overnight in Asia. 10's hit highs of 1.394. Better buying in Europe despite…(read more)

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