Posted To: MBS Commentary

The past few months have seen several troubling, but not unexpected developments for the long-term rate outlook. While they're not the type of threats that will make for drastic overnight changes, we should increasingly consider them as a part of the bigger picture. The most basic and most easily-observed threat is as simple as old school bond market calculus. OK, it's not really calculus. It's the longstanding tradition of observing trends in 10yr yields and extrapolating their impact on MBS. It has always made good sense to do that for these reasons , but times of unprecedented crisis tend to put that thesis to the test– none more so than 2020 . In 2020's case, the typical 10yr vs MBS vs mortgage rate equation was put to the test by the mortgage market's inability to…(read more)

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Source: Mortgage News Daily