Posted To: MBS Commentary
As the new quarter begins, let’s pause to consider where we should be looking for bond market motivation. What has been motivating rate movements so far in 2015 (and before, to be fair) and will that same motivation continue to be relevant? In order, the answers are “Fed policy” and “yes.” How can we be sure? Let’s start by taking a look at Fed Funds Futures . These are financial instruments that allow investors to bet on the level of the Fed Funds rate in a certain future month. Based on where those bets occur, probabilities can be derived for a rate hike. Each month with a Fed meeting has its own Futures contract. September is one of the most popular guesses for a rate hike and here’s how it’s been trading: The takeaway here is that most of February and…(read more)
Via:: MBS Day Ahead: As April Begins, Where do We Stand?
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