MBS RECAP: Best Week For Bonds in a Year

Posted To: MBS Commentary

When you pay the sort of price we paid last week (in terms of rates surging to 7-year highs), you expect to get something reasonably nice in return. This, then, is our recompense. In terms of ground covered, it was the best week we've had since April 2017. An unresolved question remains: would it have happened without Italian political drama? I know the answer. Yes , we still would have rallied, but no , we probably wouldn't have rallied at such a fast pace. Domestic bond markets and even German Bunds RESISTED the Italian implication last week and only really got with the program as things got more serious on Wednesday. The additional safe-haven buying was the last thing bond sellers wanted to see a few short days after pushing yields to long-term highs. It meant a big accumulation...(read more)

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