MBS MID-DAY: Snowball Rally Now Pulling Back; Important Levels to Watch

By Matthew Graham

Posted To: MBS Commentary

Overnight Treasury trading was positive, largely due to spillover from a much more forceful move in European bond markets. Multiple asset classes are taking part in a global flight-to-safety. That means things like stocks and oil are falling in price and things like bonds are rising in price. By the time MBS began trading for the day, bond markets were already in significantly stronger territory. Fannie 3.0s began over 3/8ths of a point higher and 10yr yields were already down under 2.0%. As European trading wound down, another wave of buying hit US Treasuries. That came not only from investors selling stocks and moving into bonds, but also from technical momentum. In other words, as new low yields are hit, additional waves of buying are automatically prompted. In turn, those bring yields even…(read more)

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