MBS Day Ahead: China’s “Fake News” Comes and Goes. Shocking Market Reaction Follows


Posted To: MBS Commentary

Yesterday, the possibility of China decreasing its purchases of US Treasuries was all anyone could talk about . Amid a sea of voices declaring this as a major fundamental market mover for US rates, I yelled counterpoints from my soap box. Today: vindication . The push back had already begun as of yesterday afternoon, but the best snippet came in this story from Reuters, which said “the news could quote the wrong source of information, or may be fake news." Naturally, bonds rallied immensely on these revelations, right? After all, if the original news was the source of yesterday's overnight weakness, such a retraction in headlines would be worth a retraction of market movement. But that's not exactly what happened. Although there was a token reaction to the headlines (which…(read more)

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