MBS RECAP: Stock Losses Helped But Bonds Had Their Own Limits

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Posted To: MBS Commentary

Bonds entered the domestic session feeling a bit down on their luck. There was some general weakness early in the overnight session, but just before 8am, European Central Bank (ECB) sources were quoted (anonymously) as generally approving of the market's consensus for policy tightening. Specifically, the sources didn't push back on the view that the ECB should stop buying bonds later this year or that it should execute its first rate hike of this cycle some time in 2019. Granted, that wasn't huge news (after all, it was the market's "consensus" that the ECB sources were responding to in the first place), but it was enough of a development to leave 10yr yields several bps weaker to begin the day. Relief came from heavy losses in stocks which pulled bond yields lower…(read more)

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