MBS Week Ahead: Time to Find Out How Much China Matters

Ah China... the US financial market's scapegoat of choice for many a swing that has nothing to do with China (with a few big, notable exceptions). Last Friday brought the biggest day of bond market weakness we've seen in a while and Chinese economic data got the credit. This week, then, provides ample opportunity to see just how much US markets really care about the Chinese economy as we'll get several big economic reports tomorrow including Industrial Output, Retail Sales, and GDP. Not only that, but GDP is the first reading for Q1 and it's expected to show a continued slide, albeit a small one, from 6.4% previously to 6.3%. If it happens to rise instead of fall, one would expect a big, negative reaction in US bond markets if last Friday is any indication. The other two reports...(read more)

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