MBS RECAP: Risk-Off Rally, Just Another Day For Bonds

Posted To: MBS Commentary

It’s hard to appreciate just how different the trading session was for stocks compared to bonds. To be sure, a near 5bp drop in 10yr yields is “nice,” but it pales in comparison to the amount of movement suggest by or seen in equities markets. In the following chart, S&P futures daily candlesticks are on the bottom while 10yr yields are on the top. Much of the day’s intraday movement was well-correlated , and that’s not too surprising given the magnitude of stock losses. It’s on these kinds of days where we’re most justified in expecting some of that classic “sell stocks, buy bonds” type of spillover/correlation. Movement in related markets like European bonds and $/Yen suggests that stocks were the star of today’s show. In other words, this wasn’t…(read more)

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