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MBS RECAP: Range-Bound Volatility as Bonds Respond to Corporate Issuance

Posted To: MBS Commentary

There are all kinds of bonds out there. We follow the 10yr Treasury even though this is a mortgage-specific site for reasons outlined here . Beyond Treasuries and MBS, there is also a fairly substantial market for corporate bonds. That market is made slightly more relevant by the fact that corporate debt is typically priced based on a Treasury note index and traders consequently use Treasuries as a part of the corporate hedging process (i.e. protecting themselves against rate exposure from the time they know they'll be involved in the deal until the time the deal is 100% complete). The bigger the corporate deal, the longer and more important the hedging process becomes. With that in mind, today saw the launch of the year's biggest corporate bond, by a wide margin. Market were aware...(read more)