MBS Day Ahead: Checking in With European Bonds. Who’s Leading Whom?


Posted To: MBS Commentary

Happy St. Patrick's Day. Now that you're thinking about a country in Europe, let's talk about European bonds for a moment. US and European bonds have had an on-again/off-again relationship since at least 2010 when the European systemic credit panic started to take shape. The anticipation for, and eventual implementation of European QE in early 2015 was the last time that Europe commanded the lion's share of US bond market attention. It's been more of a 2-way street since then. Depending on the day/week, we can still witness quite a bit of correlation between 10yr yields in the US and Germany (the European benchmark). Most recently, German Bunds look like they've had a hand in putting a stop to the post-Fed bond market rally. Is that a fair characterization? It depends…(read more)

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