MBS Day Ahead: Sideways Momentum The Risk as Stocks Threaten Breakout

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Posted To: MBS Commentary

I'll be one of the first to tell you that traditional concept of stock prices moving in the same direction in bond yields breaks down when viewing longer time frames. But in the shorter term, we frequently see them paying attention to each other. Examples of the interdependency are easiest to see when stocks are staging for a big breakout in one direction or the other. For instance, when it looks like stocks might be set to fall, bond yields hesitate to rise, as bond traders know there might be a lot of money flooding out of stocks, looking for a home . The inverse is true as well, and that's the scenario that may be more appropriate given that stocks currently look more like they're staging for a break higher. This recent consolidation in stocks–especially the fact that they've…(read more)

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