MBS Week Ahead: Late-March Rally May be Over, But What’s Next?


Posted To: MBS Commentary

In terms of directional movement, things have been great for bond markets since early November 2018. Much of that greatness, however, felt more like a correction to the swift selling pressure seen in Nov/Oct. Things didn't really get serious (in a good way) until March, which turned out to be one of only 2 months with a 30bp+ gain in 10yr yields since Trump was elected. Even then, it wasn't until the last 8 days of March that the rally got serious. This, of course, followed the Fed's somewhat surprising (in the sense that it was earlier and more aggressive than expected) announcement that it would phase out its balance sheet runoff starting in May. Weak European economic data added to the move, and the following week (last week) saw bond buyers pile on to the momentum through Wednesday…(read more)

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