MBS MID-DAY: Negative Turn After European Close

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Posted To: MBS Commentary

Bond markets began the day in weaker territory , following a pull-back in European bond markets overnight. The tenor would soon change as the the rush of liquidity at the 930am NYSE open resulted in a full reversal in Europe. Bund yields led the way lower for Treasuries, with each picking up the last vestiges of short-covering for the week (buying from traders who had previously sold bonds short). After Europe closed, US markets were left to their own devices. Treasuries and MBS have been drifting slightly weaker ever since. So to recap: US rates followed EU rates higher, then nicely lower. Then when EU rates closed, US rates returned to equilibrium. It's really that simple . The only catch is that MBS are underperforming Treasuries to some extent due to volatility and inherently shorter...(read more)

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Source: http://www.mortgagenewsdaily.com/mortgage_rates/blog/479505.aspx

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