MBS Week Ahead: High Stakes and Wide Range of Outcomes

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Posted To: MBS Commentary

Bond markets have weathered the storm of Italian political drama, which created the bulk of volatility over the past 3 weeks. They've considered the implications of various tariff-related developments at home, as well as the implications for potential European Central Bank tightening abroad. That has played out against the backdrop of steadily increasing Treasury supply and a slow-but-steady resolve to raise short-term rates on the part of the Fed. All of the above resulted in a fairly wild range trade centered on the high pivot point at 2.95% in 10yr yields. The upper boundaries were set just before Italy "saved" rates and the lower boundaries were achieved when the Italian situation was at its worst . At that point, markets even began to fear the Fed/ECB would adjust their announcements…(read more)

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