MBS Day Ahead: Crude Realities and a Tipping Point on Rate Hike Expectations


Posted To: MBS Commentary

Bonds continue sideways grind in bigger picture Lots of focus remaining on Oil prices in news and analytical community Is it justified? As bond markets continue operating in a painfully narrow range following last week's FOMC Minutes, there are only so many ways to discuss rate movement in and of itself. So perhaps it shouldn't be too surprising to see rate movement discussed in the context of other markets. "Oil" has been a perennial favorite–in 2016 especially–and today's first chart leaves no doubt as to why that is. Particularly, look at the top section first, which shows the extreme correlation seen between oil, stocks, and bonds. All of that transpired right at a time when market participants were scratching their heads as to the source of the movement. Given that…(read more)

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