MBS Day Ahead: Nostalgia not Without Painful Memories for Bond Markets
Yesterday was the most exciting day in bond markets in a long time. 10yr yields made it into the 1.7's, which had an altogether different feel than the 1.8's. Reason being: we hit 1.8's quickly and effectively in October, so revisiting them on Tuesday wasn't nearly as meaningful.
Not only did Treasuries get a big dose of nostalgia, but MBS similarly surpassed October's highs and were also able to rifle through the 2013 time capsule when it came to rate sheets. 3.5% was available for 30yr fixed best-ex at more than a few lenders, and 3.625% became widespread. These rates are consistent with the upper limits of the "golden era" of mid 2012 to mid 2013--a period of time with the lowest, most stable rates in history.
Back to Treasuries now (because they're our benchmark for big-picture bond market movement). This trip down memory lane is not without it's painful recollections. If you've somehow been able to read what I write for more than a year without going crazy, you might remember nearly incessant discussion on 1.82-1.84 as an epic dividing line between phase 1 and phase 2 of the "golden era." If you don't, here's one example and another.
And here's 1.83 on a current chart:
The circumstances of this visit are very different, and hopefully in a good way. Until we can confirm that (which would be done with a rally back below 1.83), it makes sense to be cautious.
MBS | FNMA 3.0 102-21 : +0-00 | FNMA 3.5 105-06 : +0-00 | FNMA 4.0 106-26 : +0-00 |
Treasuries | 2 YR 0.4560 : -0.0450 | 10 YR 1.8110 : -0.0440 | 30 YR 2.4340 : -0.0320 |
Pricing as of 1/15/15 7:30AMEST |
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