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MBS RECAP: Less Volatility For Bonds (For Now)

Posted To: MBS Commentary

Less Volatility For Bonds (For Now) As the week winds down, a potentially scary shift into a steeper rising rate trend seems to be averted, for now. Today's trading was a bit weaker, but yields nonetheless held in line with yesterday's highs. The 30yr bond auction passed with minimal reaction and the same can be said for the staggeringly high PPI number this morning (core y/y at 6.2 v 5.6 f'cast). Bottom line, after a strong NFP in the previous week, the bond market digested a huge amount of new supply (both in terms of Treasuries and corporates), the Fed increasingly discussed earlier tapering prospects, and 10yr yields only moved up to 1.36% (as of Thursday anyway). The "for now" caveat still applies, however. This sort of leveling-off has appeared in the past, only…(read more)

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