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US yield surge triggers mortgage hedging, adds to bond market pressure reut.rs/4jiYEzH

reut.rsUS yield surge triggers mortgage hedging, adds to bond market pressureThe sharp rise in long-term US Treasury yields has spurred mortgage-related hedging that adds selling pressure to an already strained bond market, though the impact is likely smaller than in past selloffs.

12/10/26, 3:50 pm5 reposts13 likes

Basically an Honest Bobo in Paradise

@boboinparadise.bsky.social

"rates rise, the expected life of mortgage-backed securities (MBS) extends, a shift that can make them more sensitive to further moves in yields. MBS investors often respond by either selling Treasury futures or by buying interest rate swaps that exchange a fixed coupon for a floating rate"

Basically an Honest Bobo in Paradise

@boboinparadise.bsky.social

...a process known as "convexity hedging" that effectively reduces the duration of an asset."

jbshakerman.bsky.social

@jbshakerman.bsky.social

This is the Golden Age of Trump the Nefarious.