MBS Day Ahead: Last Week’s Bond Bounce Risk Quickly Quelled by ECB

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Posted To: MBS Commentary

Bonds have had a good thing going so far in 2019. Various geopolitical uncertainties combined with the prospect of downbeat economic growth in Q1 and a generally dovish Federal Reserve to keep rates near recent lows. All this in spite of a somewhat substantial bounce back in the stock market. By the end of last week, we were seeing our first major cause for concern in more than a month as rate benchmarks at home and abroad looked like they had bottomed out and were potentially bouncing higher. But the current week is quickly making that move look like a head fake with this morning's ECB reaction being the most compelling counterargument yet. As you might expect from a rally based on European news, European bonds are benefiting more than Treasuries. German 10yr yields (the EU 10yr benchmark…(read more)

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