Few market watchers would have guessed that MBS would have held almost perfectly sideways since the start of trading on Wednesday this week. Sure, there's been just over an eighth of a point of movement in either direction, but prices are ending the day right in line with yesterday morning's opening levels. Today's econ data presented some early headwinds, but they were overcome in short order. MBS did especially well versus 10yr Treasuries due to the fact that MBS move more like shorter-term Treasuries these days (and shorter-term Treasuries were rallying).
MBS are down a quick 2 ticks (.06) and 10yr yields are up 5.1bps at 3.754
12:47 PM
Off the weakest levels and sideways. MBS down only 1 tick (0.03) and 10yr up 4.3bps at 3.745
03:31 PM
Slightly better over the past few hours. MBS up 1 tick (.03). 10yr up 2.3bps at 3.725
Lock / Float Considerations
Until it can be ruled out, there's a risk that Fed day helped define a lower boundary to the prevailing rate range in the short term. This advocates a lock bias for most clients--one that could be reconsidered if rates break to new lows in the coming days. Bigger picture movement relies on the econ data in early October, absent an unexpected, exogenous shock.
