Posted To: MBS Commentary

After having gained so much over the past 4 months (not to mention the removal of the adverse market fee), and with a Fed announcement due out tomorrow afternoon, it wouldn't have been a surprise to see bonds take a more defensive stance overnight and this morning. Instead, 10yr yields are trying to fight through the 1.25% technical level (and they're largely winning) thanks to big weakness in Chinese equities and a strong bond market response in Europe. In the bigger picture, rising covid case counts continue to correlate quite well with the recent bond rally. The following chart shows a 7 day centered moving average of case counts (which is like a micro-seasonal adjustment for variations in reporting/testing between different days of the week). Today's key event in terms of volatility…(read more)

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Source: Mortgage News Daily