MBS RECAP: Longer Term Rates Fare Well, as Low Short-Term Rates Say Farewell

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Posted To: MBS Commentary

As of mid-July bond markets seem to have put their foot down with respect to the relationship between long and short term rates. With the economic recovery and global growth outlook still open to debate--not to mention with global QE efforts ongoing--it makes sense for longer term rates to maintain a reasonable level of sponsorship. This is in line with the cries we often here for the economy being unable to sustain much of a run higher in rates. Such a run would seemingly be in contradiction to the Fed's stated intention of raising rates, but trading levels continue to show us how both can live in harmony. Let's not forget that earlier this year, 2yr yields and 10yr yields were as close together as 120bps. Today they're only 153bps apart after being closer to 180bps earlier this...(read more)

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Source: http://www.mortgagenewsdaily.com/mortgage_rates/blog/493155.aspx

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