MBS Day Ahead: Big Clues About Bonds’ Pre-Fed Stance in Futures


Posted To: MBS Commentary

The bond market had a decent enough day yesterday as it managed to hold steady-to-slightly-stronger versus Monday's ugly closing levels. "Supply" (aka new debt issuance) concerns weighed on bonds as did another run to all-time highs in the S&P. Beyond that, there's been a certain level of apprehension ahead of today's FOMC announcement and press conference. The Fed-based apprehension has nothing to do with the Fed's rate cut decision. As far as markets are concerned, the rate cut is a done deal. We can easily see that in the following chart of stocks, bonds, and Fed Funds Futures for November (the one you'd look at to get an idea of how today's meeting would go). But we can also see clues about the bond market's psychology and its read of what matters…(read more)

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