MBS MID-DAY: Moderate Losses, but Ample Volatility as Markets Digest ECB

By Matthew Graham

Posted To: MBS Commentary

By the time this morning’s ECB QE announcement hit, there was little doubt about it’s existence. Bond markets spent the overnight session continuing yesterday’s anticipatory sell-off. One of the key ingredients in that weakness was the fear of the unknown regarding the structure of the program. With that structure now much more clearly-defined, the weakness dialed back significantly from early morning levels. As expected, the European version of quantitative easing is significantly more complex than US QE, and that’s made for a mixed reaction. There are a few ways to look at it, and no way to know which way is best just yet. On the one hand, we can look at it as being sufficient relative to expectations–especially considering German Bund yields are right in line with levels…(read more)

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