MBS RECAP: Stock Lever Disengaged as Bonds (Mostly) Hold Ground

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Posted To: MBS Commentary

Stocks put in another day of gains today. This is important for 2 reasons. First, they--and by "they," I mean the S&P and S&P futures, which is the closest thing we have to an archetypal representative (like Treasuries are for bond markets)--ended yesterday's session right on an important technical ceiling that had, thus far, prevented a bounce back from the late August sell-off. It's also important because stocks and bond yields have been quite correlated of late. In other words, an 'up day' in stocks ran the risk of putting upward pressure on rates. Instead, rates held their ground for a 2nd straight day. Once again, this was more true for mortgage rates specifically as Treasuries lost a bit of ground. The MBS outperformance can be explained as easily as...(read more)

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Source: http://www.mortgagenewsdaily.com/mortgage_rates/blog/520132.aspx

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