Thursday, August 20, 2020

MBS Live Day Ahead: Let’s Clarify Mortgage Rates “Reconnection” to Bonds

I talked yesterday about rates “reconnecting with the bond market,” and that’s an assertion that needs some more clarification on several levels.  By way of background, the original disconnection refers to rates remaining much higher than MBS or Treasuries suggested they should be in the wake of March’s massive market volatility.  At the time, I said mortgages would only slowly return to a healthier spread versus bonds, and that the spread had likely sustained some semi-permanent damage due to covid-related mortgage market issues.

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