MBS Day Ahead: Consumer Prices and Trade War Risks

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Posted To: MBS Commentary

In the day just past, markets continued to gyrate on trade war headlines more than anything. The overnight session saw some bond buying on tough talk from Trump at a campaign rally while the daytime session saw bonds reverse course on news that Trump had received a "beautiful letter" from Xi. Trump went on to say that a good alternative deal was possible. Today brings the only potentially relevant piece of economic data this week in the form of the consumer price index. That said, any impact would be easily overshadowed by the right trade-related headline. Volumes have been getting very big, and both stocks and bonds are ready for a big break in one direction or the other. It continues to be the case that there's a much bigger risk of an unfriendly breakout toward higher rates…(read more)

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