MBS Day Ahead: Bonds Still on Edge Ahead of Draghi Press Conference

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Posted To: MBS Commentary

As today begins, the objective details of the ECB policy move are already out. With the exception the percent change in the € amount of bond purchases, the ECB has essentially copycatted the Fed's tapering move from 2013. Especially: Rates to remain at present levels for extended period–well past the expiration of asset purchases Reinvest principal back into same purchases for same extended period Those two bullet points are directly out of the Fed's playbook. From there, if we look at the Fed's gradual tapering from full throttle to zero over the course of 10 months, it's roughly the same net tapering effect as what the ECB announced today (an instant 50% drop in purchases that remains steady for the next 9 months). Draghi's press conference begins presently, and…(read more)

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