Posted To: MBS Commentary
Bonds Defy Logic, Rallying Nicely After Central Banks Tighten There are only so many ways to explain what happened today and those explanations go so far in accounting for counter-intuitive movement. Specifically, bonds rallied despite 2 hawkish central bank announcements (which follow hard on the heels of yesterday’s hawkish move from the Fed). This required stock market weakness and a shift in asset allocations as the last vestiges of 2021’s normal liquidity levels dry up for the holidays. An abundance of short positions (and a subsequent short squeeze) played a strong supporting role. Econ Data / Events Fed MBS Buying 10am, 11:30am, 1pm Philly Fed Index 15.4 vs 30.0 f’cast, 39.0 prev Jobless Claims 206 vs 200 f’cast, 188 prev Housing Starts 1.679m vs 1.568m f’cast, 1…(read more)
