Posted To: MBS Commentary
Even after yesterday's weakness, bond markets remained in much stronger territory on the week due to the size of Tuesday's move. This is a fairly typical pattern surrounding big, unexpected shifts in trading levels. The first day sets the direction of the move. The second day is basically a throw-away day for adjustment and the third day finally starts showing us where things might start settling down, all things being equal. That "all things being equal" part is important in cases where the big first-day move is driven by an event that's subject to near-term change (like Italian politics, which could change at any moment, as opposed to something like an NFP reading, which couldn't change for at least a month). In other words, any solidification of recent gains remains...(read more) Forward this article via email: Send a copy of this story to someone you know that may want to read it.
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