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MBS RECAP: Scary Up Close; Tame in Context

Posted To: MBS Commentary

Bond markets began the day roughly unchanged compared to yesterday afternoon’s weaker closing levels. From there, Treasuries rallied in concert with European bonds and managed to hold the modest gains through the European close. The implication here is that the net effect of US + European trading was slightly positive for bonds. Subtracting Europe from the equation led to weakness in US bonds, but we can’t take cause and effect for granted. There were other market movers in play. These included headlines regarding the government shutdown. The tone was generally conciliatory–or at least not downright hostile–for both sides of the aisle. To whatever extent bonds were benefiting from the risk of a government shutdown, these headlines suggested bond market weakness. One additional fiscal…(read more)

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