MBS RECAP: Disconcertingly Decent Day For Bonds

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Posted To: MBS Commentary

Today brought resolution (probably) for a problem that had been greatly benefiting bonds and rates. Earlier this week, the prospect of snap elections in Italy threatened to stand as a de facto referendum on the country's EU membership. Bonds loved this because a systemically-doomed EU is a great motivation for safe-haven bond buying, not to mention a general economic headwind. Today, Italian officials quietly agreed on alternate nominations that would clear up the political gridlock and help avoid the much-feared elections. Perhaps that news broke too late in the day for European markets to react much. Perhaps it was offset by other bond-friendly developments (such as new tariff announcements or troubling revelations for Deutsche Bank). Perhaps it was all a bit too sudden and convenient…(read more)

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