Mortgage bond prices opened better adding to the gains from yesterday afternoon.
News
around the globe showed continued economic weakness. Indications that
Chinese exports are weakening reignited those concerns and sent some
flight to quality buying into U.S. debts including mortgage bonds.
News
out of the euro zone indicated France continues to struggle. The Bank
of France indicated the economy is likely headed for recession. Just
another indication of how troubling things are in Europe.
There is no data today but hopefully this positive rebound will continue so we recover the losses seen earlier this week.
This
morning represents a forward drop for MBS traders. The front month for
delivery has rolled to SEPTEMBER. This is a technical aspect of the bond
market and has no real impact on daily rates. Secondary managers have
been pricing into the SEPTcoupon for some time. What is most noticeable
is the drop in bond prices as forward months fall approximately 8/32s to
10/32s.
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