MBS RECAP: Courtesy Rally To End The Week


After yesterday’s morning rally collapsed heading into the 11am hour, it feels much better today to be crossing the Noon mark with the rally very much intact, AND at higher levels than yesterdays.

What had been a broad “risk on” movement heading into yesterday’s inception of the EU Summit is now shifting to a broad “risk off” movement as the window for summit-related headlines closes. We don’t mean to suggest this an an exclusive market-mover, but rather a sort of underlying theme–a phantom force, if you will–providing a pervasive, mysterious will to sell risk-free and low-risk securities in favor of higher-risk, higher-reward “stuff” like European peripheral debt and stocks, etc…

Fannie 3.0s are up more than 3/8ths of a point (13 ticks) to 104-19 and made it as high as 104-22 moments ago. Positive reprices have continued as lenders breathe some sighs of relief and unclench their understandably protective grip on rate sheets developed over the past two weeks. 10yr yields are down to 1.766 and Stocks are cliff-jumping. Happy Friday.

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