MBS RECAP: First Shot of Trade War Fired by Looney Tunes Gun

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Posted To: MBS Commentary

Bonds and mostly stocks were braced for something fairly austere heading into this morning's hard launch of new tariffs. This accounted for a clearly-defined consolidation in stock prices beginning in late June and running through yesterday. Traders stormed the metaphorical battlefield, ready for war, but when the first shot was fired, it amounted to nothing more than a tiny flag on a stick: "BANG!" The absence of bloodshed gave stocks free reign to break the upper edge of their consolidation pattern. They leveled off at noon, but only after going on a tear. Thankfully, bonds weren't pulled along in lock-step over the last 2 days or 10yr yields would be over 2.90%. Before that, both stocks and bonds found something to like in the decidedly mixed NFP numbers . Payrolls themselves…(read more)

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