MBS Day Ahead: Is It Oil?

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Posted To: MBS Commentary

There's a lot of attention being paid to oil right now There have been moments of correlation between oil and bond yields How much of the relationship is 'causal' vs incidental? Oil has certainly been on a rampage since late 2014, moving quicker than any of the other major markets that we track for the purposes of bond market analysis (the pace was similar to Greek credit spreads during Greece's near-collapse). Like the Greece situation, any time any major market moves that quickly, there's a tendency to give it too much credit for moving other markets, like bonds/rates. To be very clear, both Greece and oil did actually have a big impact on other markets (oil continues to have an impact, obviously). The point is that the correlation is not "always on." Bonds aren't…(read more)

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