MBS RECAP: 3/19/2012


10 yr yields have been as high as 2.3917, getting much closer to the 2.40-2.42 range that many are looking to for support. Fannie 3.5 MBS are at their worst levels since early December.

For MBS, today’s trading stands in stark contrast to Friday’s outperformance (MBS made gains while Treasuries ended a bit weaker). Relative to the other day’s in the broader sell-off, today is tied for the worst for MBS, currently down 21 ticks, the same as drop seen on 3/14.

Treasuries, while certainly not having any sort of fun, have sold at a slower pace than 3/14 rising only 8bps so far on the day vs Wednesday’s 14bp rout.

With each jump weaker, bond markets are making seemingly supportive gestures–as if they might finally bounce. Current levels are once again giving off those signs, and once again, they could be genuine or could result in another ratcheting weaker. In the case of the latter, expect another wave of reprices for the worse. In fact, they’ll likely just continue to roll in depending on the lender, unless we bounce here, and convincingly so.

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