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MBS Day Ahead: No New Weakness as New Week Begins

Posted To: MBS Commentary

Last week ended on a bittersweet note as a surprisingly strong rally was met with big push-back on Friday. The jury was out as to whether we were witnessing a firm bounce after hitting the best levels in months, or simply circling the wagons ahead of the new risks in the new week. The overnight strength (largely courtesy of friendly comments from ECB's Lagarde) means it's easier to view Friday as wagon circling (incidental weakness occurring as a byproduct of traders squaring positions at the end of the week–especially if there are informative and/or risky events in the subsequent week). All that having been said, this doesn't mean we can rest easy and simply wait for additional bond market gains to start rolling in. Friday's correction was driven, in part, by actual uncertainty…(read more)

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