MBS RECAP: Stocks and Bonds Riding Same Train For Mostly Different Reasons

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Posted To: MBS Commentary

Today was simple and straightforward in one sense. Stocks and bond yields (rates) were both moving lower, and that's something the two have been known to do when investors are moving away from "risk." But the underlying reasons for the move lower only overlapped a little bit. This was evident in the morning hours when each took turns leading the way while the other held still, and again in the afternoon hours when stocks did a full swan dive while bonds had second thoughts. Or to go back to the train analogy, bonds disembarked earlier in the afternoon. Bonds drew inspiration initially from follow-through to yesterday's FOMC reaction–specifically, the reaction to Powell's dovish press conference. Weaker economic data in Europe also helped fuel bond buying demand. Finally…(read more)

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