Posted To: MBS Commentary
By yesterday afternoon, the bond market had managed to string together several of the most reassuring days of 2021. Today’s early losses provide a wake up call as to the nature of the rising rate environment. The reassurance and/or hope had to do with the ability of 10yr yields to remain below the recent ceiling at 1.62%. On the other hand, we really wanted to see a sustained break below 1.50%–something the market clearly rejected yesterday (and the reason we maintained our stance on floating only being an intraday consideration). The risk is that bonds are pivoting up above 1.50% by treating it as a ceiling at the end of February and floor in March. In the bigger picture, that 1.5+ level is right in line with the pre-pandemic lows. Today’s break over 1.62% in early trading means the…(read more)
