Monday, December 17, 2012

30y mortgage rates have stopped declining

As discussed a couple of weeks back (see post), the primary dealers had built up quite a position in MBS (mostly agency paper) - in what started to look like a crowded trade. Some of those positions have been reduced in recent days, causing long-dated agency paper to sell off somewhat (following treasuries lower).

30y 3% coupon FNMA bonds (price) (source:

As a result, the 30y mortgage rates have bottomed - for now.

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