MBS RECAP: Range Breakout!


Posted To: MBS Commentary

GDP doesn't usually move markets as clearly as it did today, but today was a bit of an anomaly. First off, we'd been waiting for this revision longer than normal due to the shutdown. Beyond that, it was a fairly sharp revision forecast due not only to the shutdown, but to the other economic uncertainty that crept in during the end of 2018. Finally, it carried asymmetric risk due to widespread expectations for the actual number to come in even farther below the 2.3% forecast. With all of the above in mind, the 2.6% result (accompanied by a 2.0 vs 1.7% reading on the deflator, an important inflation metric) was enough to put bond traders in a defensive mood at the outset. By the time Chicago PMI came out strong enough to erase last month's disconcerting slide, everyone was looking…(read more)

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