Posted To: MBS Commentary
First of all, there is no true “non-Fed-related” way to look at yesterday’s rally. For US markets, it had almost everything to do with the Fed. But the question is: was there a new motivation to rally or were markets simply waiting to rule out new motivation to sell-off before going where they would have gone already if not for FOMC anxiety? That was a long, run-on sentence, so let’s lay these options out. Here are two ways we can understand the rally: 1. The Fed was more dovish than expected, and bonds rallied because of it. 2. The Fed didn’t end up confirming fears about an accelerated rate hike timeline. They didn’t even have nice things to say about employment despite the past two bullish NFP reports. US bond markets were noticeably avoiding joining the European…(read more)
Via:: MBS Day Ahead: A Non-Fed-Related Way to Look at Yesterday and the Road Ahead
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