MBS RECAP: Bonds More Than Make Up For Last Week’s Bumpy Ride

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Posted To: MBS Commentary

From bumpy ride to smooth sailing: bonds gained more ground this week than they lost during last week's range-breaking sell-off. I firmly believe that would not have been the case were it not for the key events of the past 2 days. Yesterday, it was the surprisingly dovish ECB Announcement. Today, it was the shockingly weak nonfarm payrolls number. Sure, we can point to the internal components of the report and make the case that bond traders could have taken away sufficiently positive cues as dissuade a big bond rally, but who are we kidding? The number was 20k vs a 180k forecast… That's not the kind of gap that typically results in one of these paradoxical reactions. All that to say: I think the paradoxical reaction (where bonds began selling-off shortly after the jobs report) gave…(read more)

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