MBS Take a Huge Jump

Hello everyone! I hope your day is off to as good of a start as the MBS market.

Mortgage Backed Securities are up 36 bps today while the 10 year US treasury is down 10. Remember, these two markets usually have an inverse relationship so today is a great day for mortgage pricing. The 10 year opened right above the 1.60 critical floor that we have talked about. Over the past few hours, it has smashed though it and is hovering around 1.53. We are hoping that they remain below that mark until market close and provide a little strength to turn that 1.60 mark from a floor into a ceiling. MBS’ have not closed above their 50 DMA since early February. This morning, they broke above it and look like they will close well above it, establishing that as a new floor.  While this is awesome news for todays mortgage pricing, MBS’ are entering some technical ‘over-bought’ territory which could lead to a reversal. We are recommending locking in this mornings massive gain unless you are able to closely watch the market.