MBS Day Ahead: Do Bonds Care About The Dollar?
Posted To: MBS Commentary
Central banks are engaging in unprecedented levels of stimulus and transparency. The US is one of the worst offenders, spending at a record pace while facing a drastic revenue shortfall. Budget and trade deficits are ballooning. The Fed's framework shift raises questions about "too much inflation," even if such a thing is not an immediate threat. Long story short: if the US was a person, it would be on limited hours at work, deep in debt, pulling out all the stops, printing its own money, but confident about a better future. All of the above has reopened a conversation about the impact of the dollar. Back in 2009-2012, I didn't hesitate to make fun of the old guard who lamented the weakening dollar as evidence of "something bad." My opinion isn't nearly as strong…(read more)