October 26th Mortgage Market Wrap-up

Mortgage backed securities (MBS) closed down 44 basis points today at 100.28 having crashed through resistance at the open.  Today's open was called a gap open because there was a gap between it and yesterday's close.  The inflation clamor of yesterday's TIPS auction had MBS bonds continuing to fall while interest rates headed upward.  The market proceeded to close at the low  of the day.  The combination of a gap open and a close at the low does not bode well for bonds in the short run.