MBS RECAP: Bonds Take Yellen's Meaning, Even if She Didn't Offer

Posted To: MBS Commentary

Bond markets (and markets in general) periodically experience an interesting phenomenon whereby traders are determined to make one of two bets following an anticipated piece of news. This is most often seen in the reaction to the monthly NFP numbers. Traders aren’t always as determined to forcibly extract meaning from Fed communications, but when they are, the reactions tend to be more abrupt . Today was such an occasion. Janet Yellen could have taken her seat in the Senate and simply pointed discreetly toward the ceiling and the market response would have been the same. Investors were ready to trade rates quickly to the low or high side of the recent range if they read Yellen’s remarks as indicating lower or higher chances of a March rate hike respectively. The first few newswires…(read more)

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