MBS RECAP: Bond Markets Maintain Post-Payrolls Rally


Here’s an update for the sake of having an update on an otherwise action-less day. MBS prices are currently at the exact same levels as the first update of the day. They’ve been less than 4 ticks higher or lower ever since.

10yr yields are down 1.76 on the day to 2.503, effectively keeping them right in the middle of the post-NFP range. Volume has been nonexistent, having dropped off abruptly after bonds hit the day’s best levels at 10:30am. This increasingly looks like it will have been an unofficial “early close” for today.

The post 3pm time-frame is shaping up supportively so far. Sellers had been in control in Treasuries and to whatever extent they had selling to do, it would be done by 3pm, when most Treasury trade desks mark the end of the day, and in this case, the end of the week as well. All that suggests is that there may have been a slight pressure acting to keep bond markets contained today, and that pressure is now lifted.

Whether this introduces positive reprice potential for mortgages is a bit unclear as prices have already been as high as they are now, and still only 2-3 ticks higher than morning rate sheets. Most lenders would want to see additional positivity for anything other than a “stability reprice.”

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