As far as outright price levels are concerned, there is not a high degree of panic warranted by current price levels as MBS are still above 101-20 and tsy yields are still below the critical 3.27 to 3.3 level. So at worst we are dealing with smaller picture course corrections as oppossed to witnessing the previously discussed paradigm shift come under threat. But (there's the but...) any time MBS prices go below the lowest level of the day, we're at risk of reprices for the worse from a handful of lenders. Causality? No clear cause save the potential fear of the stock lever as stocks climb out of the pit after a petroleum report. Volume is exceedlingly low compared to recent days which opens the door for fewer dollars traded to have a greater effect on prices.
Bottom line = short term caution. Long term, no material changes...
Also, since this alert follows closely to the morning post, make sure you don't miss it.
MBS Market Alerts
