The Downside of Ultra Low Rates; Builder Confidence Fully Recovered?

The Downside of Ultra Low Rates Actions and reactions are as true in the bond market as in the natural world. The equal and opposite reaction to a sub 3% 30yr fixed rate is a spike in the supply of new MBS. From there, supply/demand 101 says we should see downward pressure on prices. That’s exactly what happened after the Fed was done buying for the day. Econ Data / Events 20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th) Philly Fed Survey 24.1 vs 20.0 f’cast , 27.5 prev Jobless Claims 1.3m vs 1.25m f’cast , 1.31m prev Retail Sales 7.5 vs 5.0 f’cast , 18.2 prev NAHB Builder Confidence 72 vs 60 f’cast 58 prev Market Movement Recap 08:59 AM Bonds were stronger overnight, generally following weakness in stocks on yesterday’s covid numbers and bank earnings. The AM econ data helped
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