Wednesday , 27 January 2021

MBS Day Ahead: NFP Doesn’t Matter, Even If We See a Big Reaction

By Matthew Graham

Posted To: MBS Commentary

“NFP doesn’t matter.” These are bold words at times, a no-brainer at others, and a lucky guess most of the time. While NFP matters greatly in general and has, on average, been far and away the most important market mover in terms of US economic data, there are occasions where it’s clearly overshadowed by other considerations. Now is one of those times. First and foremost, we need to understand what’s causing the breakout in yields seen in the following chart: If you didn’t catch the MBS Huddle video yesterday (MBS Live members make sure you’re receiving Huddle notifications HERE ), the following chart shows how US bonds have been dragged higher by European bond markets since Mario Draghi’s June 27th tapering cues. In other words, the US bond market is getting…(read more)

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