MBS Day Ahead: Losses Accelerate. Will The Fed Save Us?

Posted To: MBS Commentary

For the 17th time in 2021, we can unhappily re-use the same lead in: just when you thought bonds surely wouldn't get any weaker… 10yr yields hit more new long-term highs overnight (currently at 1.66%+, putting the 1.75% target–the one that seemed way too far away a few days ago–easily within reach of a negative Fed surprise). Speaking of the Fed, that is obviously the focus today. And it's a very abnormal Fed day due to the SLR issue. If you're thinking to yourself "what the hell is this SLR business?!" you're not alone. Read this if you haven't. And for the other 80% of you that don't click links, SLR= supplemental leverage ratio. It applies to big banks and limits the amount of their total assets devoted to lending (or owning bonds). In April 2020, the…(read more)

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MBS Day Ahead: Losses Accelerate. Will The Fed Save Us?
MBS Day Ahead: Losses Accelerate. Will The Fed Save Us?

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