MBS MID-DAY: Persistently Weaker as Data Bows to Rate Hike

Posted To: MBS Commentary

Yesterday's ISM data may have sparked some hope for a long-shot, come-from-behind, Cinderella story victory for a weak economy making an argument against a December rate hike. In simpler terms, on the off chance that the rest of this week's data was as bad as yesterday's, maybe the Fed wouldn't hike rates after all. To be sure, that was a very long shot indeed. It would have required a perfect storm of lucky breaks for bond markets, including the worst week of economic data imaginable and a surprising absence of action in tomorrow morning's ECB announcement. Still, traders weren't overly eager to sell bonds until such a long shot could be ruled out. This morning's ADP data ruled it out . Bonds have been in sell mode ever since. The pace hasn't been extreme, but...(read more)

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