MBS Week Ahead: Bond Markets Brace for Rate Hike Confirmation. It Won't Take Much

Posted To: MBS Commentary

To reiterate the most important takeaway from last week, the verbiage change in the FOMC Announcement was a big deal . When viewed in conjunction with the Minutes from the previous meeting, which showed the Fed was ready to hike based on the domestic situation but only held off due to global developments, the most recent announcement ends up looking like a courtesy reminder about a December hike. In other words, the Fed had what they needed to hike back in September, but concerns over China were fresh enough for them to hesitate. The fact that they dropped the phrase that alluded to China confirms that the global situation isn't currently looking like the impediment it was. The addition of the specific reference to the December meeting as a potential time to hike (first time they've...(read more)

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