MBS Day Ahead: If Yesterday was All Draghi, Does NFP Matter Today?

Posted To: MBS Commentary

In yesterday's recap, I asserted that the crazy sell-off was 100% about Draghi and negative infinity percent about Yellen's congressional testimony. What did Draghi do, exactly? It was actually surprisingly simple. He exposed and/or confirmed one of the fundamental market dynamics of the QE era. Financial markets are addicted to QE! This is definitely not a new concept. After all, the punch bowl metaphor has been making the rounds for years with respect to the Fed , and to a lesser extent, the ECB. Even so, there is always some level of debate as to just how closely correlated market movement is with the proverbial punch bowl. Long story short , we got a great opportunity to observe an ECB punch-bowl "de-spiking" in relative isolation. How can I say "isolation" if...(read more)

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