MBS RECAP: Light Volume Snowball Rally For Treasuries. MBS, Not So Much

There were no significant scheduled events in the offing today. Volumes were down sharply in the bond complex as well (less than 50% of recent highs). That made for a bit of a slippery slope of illiquidity as last week's short positions were flushed out and day traders chased a few big options trades. If there was actual underlying inspiration, the best case to be made was for general global growth anxiety with a growing list of anecdotes providing cause for concern rather than hope. All of the above helped Treasuries rally sharply , with 10yr yields making it as low as 1.628% by the afternoon and officially closing at new multi-year lows. MBS, on the other hand, had a downright frustrating day. They were generally unable to take part in the rally. Fannie 3.0 coupons struggled to return...(read more)

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