MBS Market Dives

Well it seems like the bond market did not believe Fed Chairman Powell yesterday when he explained that easy money would continue because our inflation levels are nowhere near his goal. We saw an immediate positive reaction for the Mortgage Backed Securities market; however, that good news did not last overnight. MBS’ started the day with a 60+ bps drive. They are attempting to climb out of the massive hole from this morning and now sit down 23 bps from yesterday.

On the upside, we will likely see another vaccine come to market, but this one is only one dose. The new Johnson & Johnson vaccine was deemed safe and effective by the FDA, starting the journal to approval. In addition, J&J claims that this vaccine is even better at reducing COVID spread through asymptomatic people. J&J claims they will be able to provide 100 million doses to the US by the end of June as well as more that 1 billion worldwide in 2021.

With MBS making such drastic moves, we are holding a locking bias.