MBS Day Ahead: What’s Up With Stocks Versus Bonds Recently?


Posted To: MBS Commentary

If you're a frequent reader, you're likely tired of hearing about "the range." Such is life when bonds are range-bound, but that doesn't mean we can't change things up. Let's check in with the good old stock lever (our shorthand reference the conventional wisdom that suggests stocks rally on positive economic developments while bonds sell). As we've often discussed, the stock lever is far from perfect. In fact, it's exceedingly imperfect and prone to major caveats depending on underlying market movers and especially the passage of time. Specifically, the longer the time frame, more the correlation breaks down. We're far more likely to see "stock lever" style correlations when we zoom in to the shortest time frames. Over intermediate time frames…(read more)

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