MBS Day Ahead: Do Stocks Really “Sell in May?”

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Posted To: MBS Commentary

There has been at least some amount of correlation between stocks and bond yields in 2018 inasmuch as the major lows for stocks in Feb and April coincided with major lows for Treasury yields. And yes, the term "major" is used loosely when it comes to yields. Moreover, we've talked about the possibility of a bigger downturn in stocks acting as safety valve for bonds. In other words, massive stock losses are one of the few things that could actually free up enough investor demand in the bond market for rates to make a meaningful move lower. With all that in mind in addition to the generally weaker trend in stocks since mid-April, it begs the question: are we going to see the typical "sell in May" mentality in stocks? Ah… but is it really that typical? Or is it something…(read more)

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