Slightly Stronger Because Not Every Day Can be Weaker
Thu, May 22 2025, 4:38 PM
MBS Recap
Slightly Stronger Because Not Every Day Can be Weaker
MBS Recap Matthew Graham | 4:36 PM
Slightly Stronger Because Not Every Day Can be Weaker
Bond yields have moved almost exclusively higher in May. At the very least, they've been in an incredibly linear uptrend. Uptrends wouldn't last very long if there wasn't some push and pull (think 2 steps forward, 1 step back). And that brings us to the best case for today's gains: sellers are taking a breath. Not every day can be a sell-off. To be sure, the gains weren't inspired by data or any new fiscal developments. We can attempt to force the mid-day pop to fit a fiscal narrative based on a comment on the Senate's time frame for a vote, but we could just as easily say it was position-squaring ahead of a holiday weekend with traders leaving at lunch time today and not coming back until the middle of next week.
modestly weaker after spending bill passage, but back to unchanged in MBS now. 10yr down 1.3bps at 4.588
12:19 PM
Nice rebound, perhaps on news that spending bill could take all summer. MBS up 6 ticks (.19) and 10yr down 6bps at 4.542
04:27 PM
Heading out near best levels with 10yr down 6.3bps at 4.538 and MBS up nearly a quarter point.
Lock / Float Considerations
Bonds/rates find themselves in the unpleasant position of not knowing where their next big impetus for improvement will come from. While it's true that rates can fall despite an obvious catalyst, this is nonetheless not a float-friendly environment. The only foreseeable exceptions would be for seriously weak economic data or a miraculous improvement in the debt issuance outlook.
