MBS Day Ahead: Time to Ramp up Focus on Europe Again?


Posted To: MBS Commentary

In 2011-2016, Europe was the dark horse market mover that ended up winning the race. Far too few domestic market participants appreciated the impact of the currency contagion drama in 2011-2012, the onset of ECB QE in 2014-2015, or Brexit in 2016. Were it not for the European continent, who knows how high US 10yr yields would be right now! Certainly, it would be high enough to ruin your day if you're a loan originator or are otherwise a fan of low rates. That broader retrospective serves as a template for the past few days. Domestic traders have been scratching their heads wondering what's up with bond market resilience. If "resilience" is going a bit too far, traders have at least been somewhat perplexed at the absence of new momentum so far in October. Typically we'd…(read more)

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