MBS RECAP: Uncommonly Calm Month-End Day; Bigger Events Coming Up

Posted To: MBS Commentary

Today ended up being all about bond markets reacting positively to last night's Bank of Japan (BOJ) announcement. In a nutshell, they just did one of those "lower for longer" statements that have become a mainstay of post-crisis central banking. Japanese yields fell and Treasuries reluctantly followed--emphasis on reluctance. As soon as the initial rally was over, Treasuries set about returning to previous levels and came within 1.3bps by the end of the day. Actually they came within 1.3 bps early in the morning, but then traded sideways for the rest of the day--ignoring most of the economic data and drawing some support from month-end bond buyers. Tomorrow should prove to be more interesting with several important economic releases in the morning and a Fed Announcement (and press...(read more)

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