Wednesday , 6 January 2021

MBS MID-DAY: Bond Markets get Another Lift from Europe; Oil/Equities Much-Discussed, but Scarcely Relevant

By Matthew Graham

Posted To: MBS Commentary

There was a big drop in the S&P just after the noon hour, and it’s being attributed to slumping energy shares or some such thing. Frankly, I haven’t seen the sort of justification for such a move that I’d like to see before actually commenting on it, but that clearly hasn’t stopped a few of the big media outlets. To make matters worse, some of the prevailing analysis suggests this is a factor in today’s bond market strength! The interesting things are twofold: 1. Oil prices fell all night and made several sharp moves lower that produced no reaction in equities markets. Why would literally ALL of the day’s equities losses come in the space of a few short minutes, well after oil prices had already leveled-off? 2. There was zero reaction in bond markets. No exaggerations…(read more)

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