MBS Day Ahead: Bonds Just Hoping for an Orderly Escape; Bigger Decisions on Hold


Posted To: MBS Commentary

In the day just passed, bonds trading was exceptionally calm in the wake of Wednesday's Fed day. As I mentioned in the recap , it was one of the least volatile moves relative to expectations of any Fed day reaction I can remember. The consolidative vibes suggest either indecision or apathy, post-Fed. The clear takeaway from a strategy standpoint is that bonds really and truly are going to be heavily data-dependent in the coming weeks, barring some technical clue that gives away traders' underlying predispositions. In the day ahead, all we can do is keep an eye out for those technical clues and simply bide our time as the bond market does the same. The Fed will be more than willing to cut rates all the way to zero if the econ data justifies the move, but they aren't going to do it…(read more)

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