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MBS RECAP: Bond Market's Simple Plan

Posted To: MBS Commentary

A few notes on the bond market's recent plans: First few days of 2020: Come into the new year ready for that break above 2.0% that everyone was expecting, but equally ready to react to unexpected geopolitical risk due to US/Iran conflict. Result: move to lower yields. Next few days of 2020: No war with Iran. Result: start moving back toward higher yields A few days after that: Detect the faint grumblings of epidemiologists identifying a new disease in China that sounds like it could maybe be like SARS. Result: stop pushing yields higher and wait for more info. Week ending Fri, Jan 24: Realize (along with the rest of the world) that this coronavirus thing could be serious. Result: set up shop as one of the most preferred safe-havens for the coronavirus panic trade. 2 weeks ago: kick that...(read more)