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MBS RECAP: Is It Another Trap and Which Coupon Do I Watch Now?

Posted To: MBS Commentary

Is It Another Trap and Which Coupon Do I Watch Now? Yesterday's bond market resilience offered hope for a bounce, but those hopes were crushed by new weakness this morning. The move took MBS to their worst levels since last March and Treasuries, since February 2020. Bonds recovered mid-day, begging the question: is this another trap? Do we just get crushed again tomorrow? Today's video discusses those prospects as well as the reasons for the shift to 2.5 UMBS 30yr fixed coupons. Econ Data / Events Fed MBS Buying 10am, 1130am, 1pm New Home Sales 923k va 855k f'cast, 885k prev 5yr auction: weak. 0.7bps higher than expected. Bid to cover 2.24 vs 2.45 avg Market Movement Recap 08:53 AM modestly stronger in Asia, moderately weaker in Europe, and now sharply weaker as the domestic session…(read more)

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