MBS Day Ahead: Things Could Get Interesting

Posted To: MBS Commentary

Bond markets are either going sideways in the bigger picture or they are rallying. To be sure, in the shorter term, they have definitely been rallying since the Fed announcement (see that 'trend' in the chart below). But in the longer term, 2015's uptrend in rates was broken in August and it's too soon to say that we've definitively entered a new trend just yet, as promising as recent trading has been. With 2015 having been billed as a year that would unavoidably result in higher rates, any meaningful push back toward lower rates demands some explanation. Naturally, we have the Fed indecision with respect to hiking, as well as the persistent lack of inflation and global growth concerns. ( Hey! That sounds similar to the Fed's reasoning as well!) But we also have this...(read more)

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