MBS MID-DAY: Living In The Shadow of Treasury Snowball Rally

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Posted To: MBS Commentary

Life isn't always fair for MBS. Sure, there was QE3 which specifically targeted MBS over Treasuries, leaving the latter out in the cold on a relative basis, but for the most part, Treasuries get to have all the fun. Case in point, the price on a 10yr Treasury note is currently up 28 ticks on the day versus a gain of only 14 ticks for Fannie 3.0s. If we want to talk yields, that's nearly 10bps for Treasuries. We'll be lucky to see a gain of more then 4bps in effective mortgage rates. What's up with that? First of all, Treasuries almost always lead the charge, whether it be higher or lower. They lose ground more quickly when the going gets tough, but they rally in a way MBS can only dream of when global markets are flying to safety or sidelines. Today is an example of the latter...(read more)

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Source: http://www.mortgagenewsdaily.com/mortgage_rates/blog/541536.aspx

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