Posted To: MBS Commentary
First, a quick point of order: remember that tonight is “the roll” for Fannie and Freddie 30yr Fixed MBS. That means March coupons will stop trading and April coupons will take over as the new representative for prices. Because April coupons have always been trading about a quarter point below March coupons, it will look like prices dropped by about that much heading into tomorrow. If bond markets were to begin tomorrow perfectly unchanged, the roll means that MBS prices won’t be anywhere close to Friday’s pre-NFP levels. That’s one of the challenges of strictly following MBS prices when it comes to keeping an eye on movements in rates. It’s also one of the reasons we rely on Treasuries as the better broad indicator of momentum for US rates, and simply stay on guard…(read more)
Via:: MBS RECAP: Bond Markets Continue Battling Back, but Meet Potential Resistance; Remember the Roll
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