MBS Day Ahead: Biggest Day of Data This Week

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Posted To: MBS Commentary

We've recently seen a refreshing reconnection between bond markets and economic data. I say "refreshing" because the classic connection between stronger data and higher rates or weaker data and lower rates, has been hit and miss in the era of unprecedented central bank stimulus. At issue was the fact that central banks embarked pledged to keep rates low and to buy bonds for a certain amount of time. After that pledged time ended in the US, the Fed switched to a month-to-month lease, so to speak–finally giving its notice in mid 2013. It would have been easy and logical for domestic markets to reconnect with economic data at that time, not necessarily because of what it might say about the economy, but rather because of how it might impact rate hike potential (the logical next…(read more)

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