MBS RECAP: Bonds Take Pre-Fed Lead-Off (In Wrong Direction)

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Posted To: MBS Commentary

Imagine you manage a baseball team. Let's say it's little league , because what follows probably wouldn't happen in the bigs. You're working with your kids on leading-off and stealing bases. One of your players lucked into a bean ball and has been on 1st base for several pitches in a game that has otherwise been pretty rough. But hey! At least you have a kid on base now! Maybe he or she will be able to steal a base or two. You shout: "OK, remember what we worked on in practice with leading-off!" Instead of inching toward second base, your player starts walking back toward home. If that's not a clear analogy, your base-runner is the bond market. It's not uncommon to see bonds take a lead-off ahead of the next at-bat–especially when it's the Fed that's…(read more)

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