MBS Week Ahead: Sideways Baseline Waits For Inspiration (And Wonders

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Posted To: MBS Commentary

In the week just passed, bonds began to settle into a range after the sharp move lower in the previous week (driven by flaring trade tensions). This settling process didn't truly emerge until Thursday. Before that bonds rallied hard into Wednesday morning mostly on follow through from the week's early move (which was driven by China's "doubling down" response on Trump's tariff tweets). The follow-through brought a European component into the mix as German Bunds surged to new all-time lows. A sharp bounce on Wednesday afternoon (right after European markets closed) set the stage for a complete reversal of the trend. Thursday morning weakness added to the case but bond yields couldn't make it up and over 1.80% before the consolidation momentum kicked in. In the week…(read more)

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