Hmmmm....

My post title sums it all up. This snapshot of our market is a little unnerving. Here we are holding, near record highs, as the treasury yield sits above 3.000%, testing higher levels. What is interesting is the mortgage backed securities market appears to want to remain at these high levels despite treasury activity.

Just look at the climb in the treasury yield... but mortgage backed securities have barely flinched. The typical inverse correlation between the MBS and treasury market is not active right now.... why???

There is talk among the informed that attribute this to low volume trading. Others to the massive spreads between MBS and treasury right now, which offers a bit a a cushion for losses... whatever the reason, one thing is for certain, this will not continue forever, and if the treasury yield does continue to rise, we can expect to start seeing sell offs in the mortgage backed securities market.which would lead to higher rates.

All things considered, right now moving into the weekend, it appears as though our market will hold for another day. All eyes on treasuries... yields must remain low for our market to hold.