MBS RECAP: Nice Gains More About Europe Than Fed

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Posted To: MBS Commentary

Bonds surged to significantly stronger levels in the presence of the Fed Minutes today. Any time we see strong gains on a day with a Fed release, chances are the Fed is behind the move. Incidentally, that's NOT the case today (spoiler in the headline, I know). So how did Europe trump the Fed in terms of bond market impact? In short, this is all about Italian political drama. The two anti-Eurozone parties who are forming a coalition government in Italy are waiting for confirmation of their staffing choices from the Italian prime minister (yeah… things work differently over there). One of the picks had previously referred to the Eurozone as a noose around Italy's neck. It's not overboard to consider this political regime as potentially pushing Italy away from the Euro. That's…(read more)

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