MBS Live Recap: Another Consolidation Attempt. Is this time different?
Fri, March 18, 2022, 4:20 PM
Another blow to consolidation. Is this time different?
Last Friday had a fairly classic “stabilization” vibe when it came to interest rates. It was the only day of the week when 10-year yields rose positively during domestic hours and was by far the smallest upside move of the week in terms of close-to-close yields. Moreover, it fell at the end of a trend of small upward movements throughout the week. Despite the positive signals, rates jumped on Monday. Here we are again with even better clues about consolidation, not to mention that the higher rates rise, the better the chance of some form of recovery. Today’s video explains if things could be different this time and what kind of milestones we could look for to assess this possibility (if we wait until next week to do so!).
Buy MBS from the Fed 10 a.m., 11:30 a.m., 1 p.m.
Existing home sales 6.02mv 6.10m f’cast, 6.49m prev
Bonds are modestly leaning on the notion of technical support with help from a triple top in EU bonds over the past 3 days. 10-year yield down 0.9bps to 2.158. MBS are flat in 3.5 coupons. Shares down 0.6%
MBS steady gains in the morning hours, now stabilizing with 3.5 coupons up 6 ticks (0.19). The 10-year yield is down 1.6bp and looks reluctant to break below 2.135 (about 2bp above now).
MBS on highs now with 3.5 coupons up only 2 ticks (0.06) on the day. 10yr underperformed due to yield curve issues (e.g. 5yr is yielding up 1.2bp while 10yr is down 1.4bp).
A calm, sideways conclusion to the afternoon with MBS finding about an eighth of a foot higher in the day. The 10-year is down 2.3 basis points and volatility has gradually eased.
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