MBS RECAP: Bonds Start Strong But End Weak

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Posted To: MBS Commentary

Bonds had a chance to make the big potential correction of early 2019 a 1-day affair. That would refer, of course, to last Friday's bond market weakness that followed an exceptionally strong jobs report and a market-friendly speech from Fed-Chair Powell. In this case, the "market" = the stock market, which is bad news for bonds. Bonds had been thriving, in part, on stock market weakness. And part of the stock market weakness was predicated on an ostensible ignorance on the part of the Fed about the damaging effects of its monetary policy stance. In Friday speech, in not so many words, Fed Chair Powell took the opportunity to let the stock market know that the Fed hears it loud and clear. Stocks subsequently bounced and bond markets continued to move into weaker territory–a process…(read more)

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