One of the best side effects of the recent consolidation has been the outperformance of MBS vs Treasuries. We often talk about the fact that MBS like stability and predictability . Conversely, they tend to underperform when the broader bond market is making a big move into levels that haven't been seen in a while. That last bit is an important point of distinction. I'm NOT saying MBS don't like big moves--just the big moves away from the prevailing trading range. The following chart shows all of this in action. The candlesticks are 10yr Treasuries and the blue line is the spread between Treasury yields and MBS yields (higher = weaker MBS). Notice that MBS were at their weakest versus Treasuries in mid-2016, and again in Nov 2018. These happened to be the two most recent extremes in 10yr yields
from
http://www.mortgagenewsdaily.com/reports/newsletter/2019/2/6/3770
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