Why The Range Risk in Treasuries Matters to Mortgages

We've been following .58% in 10yr yields for months as the best candidate for the bottom of "the range."  Now that mortgage rates have largely settled relative to Treasuries, the .58% floor, until and unless we see yields move below .58% and remain in stronger territory, it suggests bonds and mortgage rates may take some time to consolidate or even correct toward slightly higher levels before doing whatever they're going to do next.

Econ Data / Events
Market Movement Recap
08:18 AM

Stocks and bond yields initially moved lower overnight, but reversed course in Europe.  Stocks are still slightly weaker, but bonds reversed more sharply with 10yr yields up 1.2bps to .587%.  2.0 UMBS are starting out 3 ticks weaker (0.09).

11:53 AM

No reaction to data (or anything else for that matter).  Bonds remains sideways to slightly weaker.  10yr yields are up .7bps at .584. UMBS 2.0 coupons are down 1 ticks (0.03) at 102-28 (102.875).

01:48 PM

As stocks slide softly, bonds have found a small amount of traction.  2.0 MBS are back to 'unchanged' on the day.  10yr yields are only half a bp from unchanged at .582.