Inflation fears

Mortgage Bonds are trading lower this morning due to the weight of Treasury auctions this week, tough overhead resistance and the uncertainty surrounding the Fed statement that is set to be released Thursday afternoon.

Besides the aforementioned headwinds that Mortgage Bonds face this week, Bonds have a fundamental headwind, and that is inflation fears. The markets are now pretty much expecting Quantitative Easing 3 to happen and with more accommodative policy, comes higher inflation expectations.

Leonard Winslow
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