MBS RECAP: Bonds Bounce Big After Weak Inflation Report

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Posted To: MBS Commentary

There was a time–in fact, there was a stretch of several years–when inflation-related reports just didn't matter . I would have been the first to tell you that (and often was), even as those with a more conventional approach to market analysis would never dismiss the relevance of inflation when it came to bond market motivations. Still, the proof was in the pudding. Inflation reports would surge and retreat, falling far from forecasts. Yet bond markets wouldn't bat an eyelash. Bonds even moved in the opposite direction from that suggested by the inflation data on many occasions. But inflation is back! Well, to be clear, the importance of inflation-related data is back. Inflation itself, as seen again in today's data, is struggling to come back, and that's a coup for bond markets…(read more)

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