MBS Day Ahead: Suddenly, Bonds Are Pretty Sure The Global Economy is Doomed

In the day just passed, bonds sold off by a completely average amount in the context of recent volatility and new trading range. Motivations were above-board and easy to confirm (trade war headlines). The move was mirrored in stocks and other assets. Bottom line: as far as moderately-paced sell-offs are concerned, this one was totally boring. The overnight session was less boring with a slew of flat-to-weaker economic data around the globe. It prompted a gradual rally at first, followed by a sharp rally bringing yields to new long-term lows before the open. In the day ahead, traders who haven't figured out what's going on yet will continue to scratch their heads and try to piece together the new reality. Actually, it's an old reality that has simply been coming into focus by increasing...(read more)

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