MBS Day Ahead: How did Such a Good Week Happen?

Posted To: MBS Commentary

If you'd just had your worst week in 7 years, it's always nice if the next could be markedly different. That's the case for bond markets this week, assuming nothing outrageous happens for the rest of the day. In fact, if markets closed right now, this week's gains would easily outpace last week's losses. Who can we thank? In a word: Italy. More than anything, it's been the downward spiral in Italian politics fueling a rally in safer-haven bonds (like Treasuries and German Bunds). Who cares about Italy? More people than you might think. Even though it's only one of 19 countries in the Eurozone, it's important for a few reasons. First off, it's the 3rd biggest economy in Europe, so the economic impacts of any Italian drama can't easily be brushed off. Just...(read more)

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