MBS Day Ahead: Bigger Picture Risks With a Major Caveat

Posted To: MBS Commentary

Bond markets--especially Treasuries--had one of their worst days of the month yesterday. Or maybe they didn't... It's hard to say for sure when volumes were about half that of an average day and roughly 1/3rd of the average NFP day. Not only that, but we also know there are far fewer active market participants this time of year. Finally, we also know that trading is less motivated by organic, long-term considerations and more by end-of-year housekeeping needs. In other words, there's always some chance that days like yesterday were/are purely incidental and January's trading will be January's trading either way. Of course, if January's trading is bad for bonds, yesterday will end up looking like an ominous forewarning . But in order for it to truly be that sort of coal...(read more)

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