Friday, June 29, 2018

MBS RECAP: Deceptively Decent Week

Posted To: MBS Commentary

On 2 occasions this week, bonds set closing yield lows for the month. Moreover, if we strike the craziest day from late May from the record (since Italy was a temporary market mover), we saw the best closing levels since mid April. It would be nice if we could say that there were any specific, scandalous reasons for such strong levels. Instead, we merely inched our way lower in rates, perhaps catching just a whiff of benefit from the big selling in stocks. In the bigger picture, both stocks and bonds are consolidating--and have been for most of 2018. Stocks are waiting to see if the party is over and bonds are waiting to see if they might be allowed back into the party. Translation: trade war headlines are a footnote on the essay of the broader economic cycle. The econ data is good now, but...(read more)
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