MBS RECAP: Bonds Staying Thirsty For Stock Drama–Too Thirsty

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Posted To: MBS Commentary

The bond market has seen one too many "stay thirsty" memes. For example, "I don't always rally for more than a few days in a rising rate environment, but when I do, it's because of massive stock losses." As we've discussed quite a few times recently (and really, any time that stock losses start pulling bond yields lower), there are diminishing returns. Bonds have a thirst that will only be quenched by significantly more abrupt panic in stocks. While today's stock volatility might have looked like panic earlier this month , at this point in the correction cycle, it was just another day . Bonds weren't impressed. 10yr yields were moderately higher through the morning hours, but began to recover as stocks moved lower in the afternoon. New tariff headlines…(read more)

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