Tuesday , 18 December 2018

MBS Day Ahead: Another Day of Stock Watching; Don't Expect Miracles

By Matthew Graham

Posted To: MBS Commentary

Is there potential for today to turn into a “black Friday” with catastrophic stock losses that usher in the most amazing bond rally we’ve seen in years? Sure… that could happen any time, really, depending on the underlying events driving the move. In the current case, it’s not highly likely unless we’re ready to accept the end of the current economic expansion. That would be hard to do given the current course of economic data. Rather, the big shift in stocks will be reserved for a time when we’re also seeing a big enough shift in the underlying data to cool the Fed’s rate hike aspirations. This is why people like to blame the Fed for “causing” stock sell-offs, but the fact is that it’s the data driving the Fed AND stocks. Based on the trajectory…(read more)

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