MBS Day Ahead: Bonds Cheer ECB’s Mic Drop


Posted To: MBS Commentary

Today's domestic session begins with a positive reaction to the European Central Bank (ECB) announcement. The ECB broke from tradition by dropping their bigger bombs at the 7:45am announcement as opposed to Draghi's 8:30am press conference. They also arguably dropped the proverbial mic in a way we haven't often seen by making definitive statements about bond buying and rates well in advance of any changes. Specifically, the ECB will taper its bond buying purchases by 50% in Oct-Dec, and then be done buying new bonds. They'll still be reinvesting proceeds until further notice and they won't be considering a rate hike until the summer of 2019. At first glance, the tapering announcement seems like a problem for bond markets. In fact, it did cause a bit of initial weakness,…(read more)

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