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2026-02-17 21:47:19
[US MBS Spreads Trapped in a "Price Discovery" Dilemma] ⑴ On Tuesday, the flattening trend in US Treasury bonds continued, with the market repricing after the holiday. Dragged down by risk aversion in global stock markets and AI-related sell-offs, the 10-year US Treasury yield fell to 4.018%, a new low since November 28th of last year. However, the MBS spread lagged significantly, finding itself in a "price discovery" predicament against the backdrop of mortgage rates nearing recent lows. ⑵ On the macro level, the market is digesting multiple signals. Japan's fourth-quarter GDP fell far short of expectations, providing justification for Prime Minister Shigeru Ishiba's aggressive fiscal stimulus, but a Treasury report warned that bond issuance could surge by 28% within three years, raising concerns about debt sustainability. Weak UK employment data, with the unemployment rate rising to a five-year high, has pushed market bets on a Bank of England rate cut in March to 75%. ⑶ Domestically, the New York Fed Manufacturing Index and the NAHB Housing Market Index will be released today. The focus this week includes the Fed meeting minutes, the revised fourth-quarter GDP figure, and PCE inflation data. In addition, the Treasury Department will issue $16 billion in 20-year Treasury bonds and $9 billion in 30-year TIPS this week. (4) Geopolitical and policy risks are also a major concern. The US-Iran Geneva talks and the naval exercises in the Strait of Hormuz have drawn attention, and the Supreme Court may rule on the legality of Trump's tariffs on Friday. Federal Reserve Governor Barr and San Francisco Fed President Daly will speak today on AI and the labor market, and the market is looking for policy clues.
