Posted To: MBS Commentary

There's a bit of 20/20 hindsight in the observation that MBS strength could/should only last for so long before experiencing a bit of a correction. I'm not talking about outright price levels per se. Rather, MBS 'performance' is measured against a benchmark for the asset class. 10yr Treasuries are the most common. As the Fed's bond buying campaign caused MBS prices to skyrocket, Treasuries were feeling pressure from increased Treasury issuance expectations (due to fiscal measures) among other things. More issuance = more supply = lower prices and higher yields. Here too, everything is relative. Obviously, Treasury yields managed to fall quite nicely from March 19th through April 1st. They just didn't fall as much as they could have without the looming issuance threat…(read more)

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Source: Mortgage News Daily