MBS RECAP: Bonds Shake Off Panic, Helped by Weak Data and Strong Auctions

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Posted To: MBS Commentary

Yesterday morning saw bonds weaken enough to cause some small measure of panic among bond bulls. Said bulls had been nodding their heads all last week as they were finally seeing yields that made sense in the context of long-lasting trade wars, tepid economic data, and little incentive on the part of the administration to make any market-saving gestures while stock prices seemed willing to bounce on the simple hope of Fed rate cuts. The issue was that the trade deal announced between the US and Mexico was in the same vein as a market-saving gesture (i.e. bad for rates/bonds). Granted, it's nothing on the order of a US/China deal (largely because there wasn't any major change to the existing US/Mexico deal) but the forbearance of new tariffs was enough to make bonds rethink the rally…(read more)

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