Posted To: MBS Commentary
Why Bonds Really Rallied on Thursday Thursday’s big bond rally was not a foregone conclusion destined to follow the tapering announcement, although positions taken in the run up to the announcement left the market vulnerable to the friendly shock provided by the Bank of England (BOE). The BOE announcement and subsequent comments dominated the momentum early in the US session with British 10yr yields dropping roughly 14bps versus “only” 8bps for US 10s. This was a story of imbalanced short positions getting forced to cover (the proverbial short squeeze). While that’s not a durable justification to rally, it’s better than a big nasty sell-off. Econ Data / Events Fed MBS Buying 10am & 1130am Jobless Claims 269k vs 275k f’cast, 283k prev Labor Costs Q3 8.3 vs 7.0 f’cast…(read more)
