MBS Day Ahead: The Biggest Risk to Fledgling Bond Bounce


Posted To: MBS Commentary

Today begins the 3rd day where US Treasuries aren't imploding after hitting 7 year highs last Thursday. At this point, we might consider the resilience to be some sort of fledgling bounce attempt, even though we can continue to be concerned about technical floors (discussed here ). But let's say that 3.06% is convincingly broken today and confirmed tomorrow. Then what? If that happens, I will be looking squarely at the Italian political drama and European bond markets. What follows is a bit of an outline for a more robust primer on the topic of European bond markets as they interact with US bond markets. Does rate volatility in Europe really affect US rates? There can be no greater proof of this than the summer of 2012, when the EU debt crisis was at its apex. There's no way we…(read more)

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