MBS Day Ahead: Watching Out For a Post-Korea Bounce

Posted To: MBS Commentary

We’ve seen it before and we’ll likely see it again. Bond markets (and most other markets, for that matter) respond quickly to some unexpected headline, moving to levels they otherwise may not have seen, thus testing the boundaries of whatever range we’re following at the time. We then wonder if the move constitutes an official break of the range. Shortly thereafter, markets begin unwinding the initial move and return within the confines of recent ranges. That’s the long and the short of the bond market story over the past 2 days following the North Korea missile headlines from Monday afternoon. In general, markets moved ” risk-off ” starting on Monday night. European markets added to the momentum like a flare-up that chokes the underlying fire . Ever since then, all…(read more)

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