MBS RECAP: Bonds Stay Green Despite Fed Minutes and Stronger Econ Data

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Posted To: MBS Commentary

Bond markets improved overnight, but were under pressure in the morning after stronger ISM Manufacturing data and then again following the release of the Minutes from the December Fed meeting. By the end of the day, a chart of 10yr Treasury yields looked like an EKG returning to a baseline. One peak for ISM and a smaller secondary peak for the Fed Minutes. Keep in mind that all of the above is occurring in a very narrow range. Looking at the details too closely doesn't make much sense, but this is all the movement we have to talk about! The ISM reaction was understandable as the "New Orders" component came in at the best levels since 2004 . The inflation component also ticked up noticeably, and it's this, more than anything, that gets the attention of bond markets these days…(read more)

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