MBS Day Ahead: What The Day-to-Day Moves Are Saying About The Bigger Picture

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Posted To: MBS Commentary

In the day just passed, bonds started out strong with help from exceptionally weak economic data in Europe. German manufacturing, in particular, continues to plumb the lowest depths since the European crisis in 2012. We're also seeing signs of manufacturing weakness spilling over into the services sector, both at home and abroad. In fact, it was the Markit Services PMI data that came out weaker-than-expected in the US yesterday while the manufacturing numbers slightly outpaced expectations. With weak manufacturing being generally assumed, the market was more willing to react to the miss in the Services PMI. Gains were short-lived as traders methodically pushed yields up to negative territory by the close. In the day ahead, we can choose to focus on the nitty gritty, short term market movement…(read more)

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