MBS Day Ahead: Week’s First Significant Economic Data as Bonds Build Ceiling

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Posted To: MBS Commentary

It may seem a bit counter-intuitive to be talking up economic data in light of last week's bond sell-off. Friday saw weaker-than-expected consumer spending and sentiment as well as the lowest ISM Manufacturing PMI in more than 2 years. Nonetheless, bonds continued to weaken. Rather than read those events as a suggestion that "data doesn't matter," I think it's more fair to say that markets were preoccupied with other things–not the least of which being a 3-day snowball move that was arguably pushed along by economic data on the first 2 days. While we may continue to see such moves, and while there are several non-data headlines that could have a big impact on rates (on topics like US/China trade or Brexit, for instance), we definitely shouldn't assume this market…(read more)

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