Bonds Recovering a Bit After "Framework of a Deal" on Greenland
Wed, Jan 21 2026, 3:45 PM
MBS Recap
Bonds Recovering a Bit After "Framework of a Deal" on Greenland
MBS Recap Matthew Graham | 3:44 PM
Bonds Recovering a Bit After "Framework of a Deal" on Greenland
Geopolitics have been front and center for financial markets over the past 2 days with both stocks and bonds taking clear cues from newswires pertaining to tariff brinksmanship, trade deal negotiations, foreign wealth fund participation, and ultimately, the late-day announcement of a "framework of a deal" regarding Greenland. Details are in short supply, but the most important development being a pause on the plan to implement new tariffs on February 1st. Markets are cautiously trading this as a win for now with stocks and bonds at the best levels of the week, but definitely not back in line with last week's levels.
choppy, sideways overnight session and little-changed so far. MBS up 2 ticks (.06) and 10yr down 1bp at 4.286
01:25 PM
reasonably well received 20yr bond auction. 10yr down 3 bps at 4.266 and MBS up an eighth.
02:57 PM
Best levels of the day after Greenland-related tariff pause and word of a "deal framework." MBS up 6 ticks (.19) and 10yr down 4.6bps at 4.25
Lock / Float Considerations
Geopolitical risks began to ebb on Wednesday with potential Greenland de-escalation. This helps resolve the asymmetry we discussed on Tuesday and possibly creates some favorable asymmetry in the other direction. To reiterate yesterday's important point: asymmetric risk is never intended as a comment on future directional movement, but rather, the relative size of rally potential vs selling potential. On a very short term, tactical note, those floating with lenders who do NOT reprice for the better this afternoon will have a bit of a cushion heading into tomorrow as rate sheets were flat before several lenders began to reprice (and MBS are up roughly 19bps on the day as of 3:30pm).
