MBS RECAP: Stocks and Europe Help US Bond Markets Battle Back


Yesterday’s sell-off was somewhat disconcerting as it raised the possibility that the push back against September’s weakness had run out of steam.  Today was a relief then, in that MBS and Treasuries proceeded to their best levels in two weeks, thus keeping the hope alive for the bounce back to continue. 

Help came from European markets at first.  German Bunds moved back under 1.0% as part of a rally that began right from the start of the European session.  US equities markets took the baton in the morning with SP futures losing roughly 30 points from peak to trough.  This was only the 4th time this year that the SP has crossed convincingly below its 50-day moving average.

Economic data, once again, played no role in motivating markets.  The Durable Goods headline, despite being seemingly huge at -18.2 was a non-event (due to last month’s huge Boeing orders) and very close to forecasts to boot.  Jobless Claims haven’t been moving markets as investors’ attention has been less attuned to how many people are working and more to wages, hours, and spending.

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