Saturday , 16 January 2021

MBS Day Ahead: Not Without Hope, But Defensiveness Makes Sense

By Matthew Graham

Posted To: MBS Commentary

You might have detected a more bearish tone in my opening thoughts for March, titled: Refocusing on Data as March Begins . If you didn’t read that, or don’t care to, the gist is that much has recently changed in terms of the “stuff” that had helped bond markets up until early 2015. Traders wasted no time in driving this point home over the past two days. With ECB QE a done deal, Greece on hold for months, and some signs of life in the last reading on wage growth, it makes much more sense for traders to be defensive about how bonds might move higher than to be aggressively betting on another move lower. The scariest 3 days of the week begin now, and I think much of current weakness reflects the apprehension that these 3 days could validate the defensive stance mentioned above…(read more)

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