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MBS Day Ahead: Anything Can Happen in Mid-October

Posted To: MBS Commentary

At one point in time (and perhaps to this day) if you'd asked the average bond market watcher to name the top 3 months for volatility, October would definitely have made the list. There are several potential reasons for that–the biggest one being that for more than a decade, bonds have been far more likely to rally for a few months at some point in the middle of the year and sell off (or at least end the positive trend) heading into the end of the year. What are some potential reasons for October filling this role? First off, it's really not any more guilty than any other Q4 month due to the surprisingly cyclical nature of the long-term bond rally. In fact without major monetary policy changes from the Fed in 2013 and ECB in 2014, those two years would have had a better chance to have…(read more)

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