Mortgage Bonds are trying to stabilize after tame inflation data at the wholesale level was reported this morning.
The renewed talk of tapering in the past week has sent Mortgage Bond prices lower and the bargain basement prices are luring in buyers.
I am recommending to float, but as we know, sentiment can quickly reverse course. If there are any sudden changes, I will get back to you. Have a great weekend!
PPI MoM came in at -0.1% (0% expected) while Core PPI rose 0.1% (0.1% expected). PPI YoY came in at 0.7% (0.8% expected) and Core PPI rose 1.3% (1.4% expected).
In the U.S., the market is opening higher after weaker than expected PPI numbers. In MBS, lower coupons outperformed yesterday and are another 1-2 tics tighter this morning. The basis has come off the lows and mortgages have performed well over the last week as supply/demand shifts in favor of demand and the street struggles to find bonds for sale.