MBS RECAP: Bonds Surge Again As Risk Meltdown Continues

Posted To: MBS Commentary

What's a risk meltdown? What's a "risk market" for that matter? This is just a shorthand term for anything investors are normally buying when stocks and broader economies are improving. The most quintessential risk market is the equity market, but in the current case, oil is in the same boat. It's not hard to imagine that a risk meltdown benefits the safer haven markets. The quintessential safe haven (apart from cash) is the US Treasury market, with other low-risk bonds close in tow (like MBS). The safe havens have been basking in the warm red glow from the risk market conflagration, and today's bonfire was particularly bright. S&P's are off their lows for the day, but remain down more than 2% as the NYSE close approaches. This translated into more than a 9bp...(read more)

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