MBS Day Ahead: Bonds Not Threatened By Stimulus; Consolidation Continues

Posted To: MBS Commentary

After the GA senate elections, the bond market immediately knew it needed to prepare for additional stimulus, even if moderate democratic voices might serve to limit the size and scope. We hazarded a guess that this was worth 10yr yields rising 25bps, roughly and finding support around 1.17%. Bond traders have now effectively made the same guess with yields switching into rally mode almost immediately after breaking above 1.17%. If that sell-off was based on the expectation for additional near-term stimulus, then last night's Biden speech was exactly what traders had priced in. The name of the game is "consolidation" now… the bridge… the intermission between the initial push up from super low covid-inspired yields and the significantly higher levels that traders can imagine…(read more)

MBS Day Ahead: Bonds Not Threatened By Stimulus; Consolidation Continues
MBS Day Ahead: Bonds Not Threatened By Stimulus; Consolidation Continues