MBS RECAP: What's Up With MBS Underperformance Today?
Posted To: MBS Commentary
What's Up With MBS Underperformance Today? As long as we're not dealing with big, obvious, unique market realities (i.e. financial crisis, QE3, Covid and the aftermath), MBS do a pretty great job of moving the same direction as US Treasuries and by roughly the same amount. Today was not one of those days, at least if we're looking for 10yr yields to set the tone. Our first clue is seen in the 5yr sector, where Treasuries are negative on the day. In other words, the yield curve is steeper. Since the average mortgage doesn't tend to last nearly 10 years, it's not unreasonable to see MBS take pages out of the 5yr playbook. Additional reasons will be discussed in today's video. Econ Data / Events Fed MBS Buying 10am, 1130am, 1pm Retail Sales -1.1 vs -0.3 f'cast, +0.7…(read more)