MBS RECAP: Bottom Falls Out For Both Stocks and Bonds

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Posted To: MBS Commentary

Both stock prices and bond yields moved sharply lower today for a combination of reasons. Trade tensions are ongoing, with visible effects being increasingly noted. British politics are also weighing on markets with Theresa May likely leaving office within the week. Most obviously today, the Markit manufacturing and non-manufacturing PMIs suggested economic contraction (or major deceleration, depending on the internal component in question). This coincided with heavy losses as the start of the NYSE session in stock to create a flood of safe-haven demand in the bond market. Bonds had their own structural motivation as well. This refers to the " structure " of the bond market in terms of the balance of trading positions with various stop-loss levels and duration preferences. In general…(read more)

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