10
Sep

MBS MID-DAY: Volatility Amid Lack of Data; Huge Corporate Bond Pricing

Posted To: MBS Commentary

MBS Live : MBS Morning Market Summary Bond markets began the day in weaker territory with a number of factors eligible for blame. Overnight data was stronger in China and Europe.n Tensions eased over Syria after news came out that Syria would agree to turn over chemical weapons to the UN, and Treasuries remained pressured by rate-lock selling for the massive Verizon bond offering set to be priced later today. As we’ve previously discussed, when a firm is issuing a corporate bond (taking in investment that they’ll then make payments on at a rate that usually involves a benchmark like 10yr Treasuries + a margin), they may “lock in” its cost of funding by selling Treasuries. This means they’ve given up the right to earn today’s interest rates in exchange for cash. If prices fall and rates move…(read more)

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