Mel's Blog

After yesterday's heavy sell-off, Mortgage Bonds are bouncing nicely higher so far today on weakness in the Stock market.  Oil prices continue to surge higher, causing Stocks to reach levels not seen since March, and sending money over into Bonds.  Remember that after the close yesterday, there was a 31bp Bond Coupon Rollover, so we must factor in -31bp when looking at yesterday's candle, and the losses from each of the pricing windows from yesterday morning's rate sheet.  

The only report due out today is the Fed's Beige Book, to be released at 2:00pm ET.  The Beige Book is a gathering of "anecdotal information on current economic conditions" by each Federal Reserve Bank in its district.  Most economists agree that economic conditions are generally soft across the country, with a few pockets of exceptional weakness and moderate growth.  Additionally, there will be several Fed members speaking today, including Donald "Ice Cream" Kohn, Randall "The Black Hand" Krozner and Sandra Pianalto.   

The last time Mortgage Bonds traded at these levels back in March, prices rebounded sharply higher, which can be seen on the Bond Page in a 6-month view.  As I discussed in yesterday's Alert, after such a steep sell-off recently, Bond prices were overdue for a bounce higher.  I am going to advise Floating, and see if the Bond can build on this morning's positive momentum.