MBS Day Ahead: Waiting on ISM For Indication on Sensitivity to Data

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Posted To: MBS Commentary

Bigger picture: bonds consolidating inside March/April range Technicals all turning bullish, today is important confirmation Data sensitivity is a bit of a mystery; ISM could help confirm The longer you've been following markets, the more familiar you will be with the concept of data dependency . In other words, the traditional relationship between data and bond markets suggests that stronger economic fundamentals push rates/stocks higher and vice versa. Of course this trading dynamic has broken down at times –especially when QE has been at stake. In that twilight zone, weaker economic data increased the chances of Fed QE and paradoxically boosted stocks–sometimes enough to paradoxically hurt bond markets. While QE isn't at stake right now, the Fed's rate hike agenda is very much…(read more)

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