MBS RECAP: Bonds Tank, Rates Spike, No Satisfying Explanations

Posted To: MBS Commentary

In a perfect world, massive sell-offs in bond markets would have logical explanations--the sort of tidy cause and effect relationships often seen following the big jobs report back during the days when markets cared about it much more than they do now. Run-on sentences aside, the point is that motivations are more opaque at the moment. We don't just have one overarching event moving the needle. There's no big jobs report. There's no taper tantrum, Brexit, Greek debt crisis, or ECB QE. Instead , we have a combination of events creating a theme and that theme, in turn, creating some less easily understood trading motivations. One set of events centers on central bank policy . Specifically, Japan and Europe are increasingly following in the Fed's footsteps with respect to extracting...(read more)

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