MBS RECAP: Bonds Briefly Touch 2017's Best Levels For No Apparent Reason

Posted To: MBS Commentary

"For no apparent reason" is a bit of an overstatement. There are several plausible reasons that bonds could be rallying as well as they are at the moment– not the least of which being the extent to which they sold off at the end of 2016. The rationale for the 2016 sell-off was somewhat tenuous, given its size. MBS Live has been steadfast in saying that we were not seeing a 1:1 ratio of justification and market movement. Reason being: the justification in this case was the " growth and inflation " potential associated with the new administration combined with the fact that any major bounce in yields right now might make it look like a decades-long bullish trend was coming to an end. Even traders who didn't believe in that narrative were best-served by pushing rates higher…(read more)

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Source: Mortgage News Daily

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