MBS Week Ahead: Did Bonds Get a Pass From Stocks Last Week?

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Posted To: MBS Commentary

Before last week's stock rout, bonds were stuck in a rut. For four straight sessions, they hit the highest intraday yields since 2011. Even after the 3rd biggest stock sell-off since the financial crisis, Treasuries were reluctant to rally in any extreme way. Take away the worst yields of the preceding 4 days and the post-rally levels last week would STILL have been the highest since 2011. There's no question that bonds finally acquiesced to stock volatility as a key market mover. That continued to be the case throughout the week. The lower section of the following chart shows the difference in magnitude between the two moves as well as the consolidative patterns that both have carried into the current week. The implication is that this week will be all about resolving these consolidation…(read more)

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