MBS RECAP: Modest Volatility and Back to Unchanged After Fed Minutes

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Posted To: MBS Commentary

Bonds focused on technicals, range-trading, corporate supply, and the FOMC Minutes today. It all added up to almost no net change across the board, so I hesitate to read too much into any single development. The tone was definitely weaker in the morning, volatile in the hour following the Fed, and then stronger into the close. Big corporate bond offerings from Toyota ($3.5bln), Citi ($5.25bln), and a big Australian bank ($3.5bln) were launched in that same hour and likely added to the volatility. As far as interpretations of the Fed Minutes are concerned, there were two distinct, opposing points. On the one hand, the Fed saw some risk of inflation overheating, thus requiring even faster rate hikes. On the other hand, the Fed pointed out the downside risks associated with a stronger dollar and…(read more)

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