MBS ALERT: Lows of the Day
By:
•
The S&P has broken out from its recent 970-980 range and is looking to test 1000....
Although many might expect this to cause chaos in the TSY market as portfolio allocations favor riskier stocks....the 10 yr is holding steady near 3.70%. Unfortunately "rate sheet influential" MBS coupons are not performing as well as their benchmark big brothers...
The FN 4.5 is 10 ticks off its morning price highs, lenders who have already published may reprice for the worse.
If the 10 yr can continue to hold near 3.70. The fall in MBS prices should stabilize. If TSYs are unable to hold...MBS prices will move lower
2s vs. 5s: 152bps
2s vs. 10s: 251bps
5s vs. 10s: 99bps