MBS RECAP: After Joyride with VW Bonds Get Hit by BMW

Posted To: MBS Commentary

Bond market movement over the past few days certainly isn't ALL about the VW news, but I've reluctantly come to accept just how much of a role it played. It's not that bond traders are sitting around waiting to find out what happens with VW per se. Rather, VW caused or added to the generalized anxiety in equities markets, which in turn helped reinforce some bond market optimism. The optimism had its own reasons in addition to equities weakness. Today saw far fewer corporate bond deals, which had been a big issues so far this week. Add to that the fact that Treasury auctions were done this afternoon and much of the previously troublesome "supply" considerations were out of the way for bonds. The curveball came later in the afternoon. After earlier news that BMW may have...(read more)

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