MBS Day Ahead: Jobs Report Versus Tariff Reaction

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Posted To: MBS Commentary

As investors have sought a safe haven from trade-related risks, bonds have benefited more than they otherwise might have and stocks have been restrained. The trick is that a trade war isn't a thing that hits markets quickly and decisively, so there's more guesswork than normal. The well-known fundamental problems for rates (Fed policy, Treasury supply, upside growth potential) all make clear cases for rates moving higher while trade war fears make a highly uncertain case for rates moving significantly lower for an undetermined amount of time. Traders don't want to get too far on the other side of either of those market movers, and that's precisely why we haven't seen any memorable moves in 2018. Looking back at the past, we can see that such periods of indecision can only…(read more)

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