MBS Day Ahead: Paying The Price For Asymmetric Risk

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Posted To: MBS Commentary

Last week's key events were the Fed announcement on Wednesday and the jobs report on Friday (with other econ data playing a strong supporting role). The Fed helped bonds. They were much friendlier than expected, but critically, they justified that friendliness with concerns over economic growth. In short, they are watching economic data like hawks (or doves?) for any sign of weakness. Such weakness would justify an indefinite pause in the rate hike cycle. To hear the Fed say it last week, it seems they're gearing up for the next recession or contraction. There was an air of concern in Powell's press conference. His tone was more staid and somber than normal, but not panicked. Had Friday's NFP and other data come in weaker than expected (or merely AS WEAK as expected), Wednesday's…(read more)

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