Wednesday , 20 January 2021

MBS MID-DAY: Swiss Surprise Leads to Snowball Rally For Bonds

By Matthew Graham

Posted To: MBS Commentary

The following is an excerpt from of an update that appeared this morning on MBS Live. Members will have already seen it. All About the Franc, ‘Bout the Franc, Not Data If there’s one reason that bond markets are in positive territory today, it’s the overnight shocker out of Europe. Reuters can tell you about it better than I can: Swiss central bank shocks markets with currency ‘tsunami’ This did two positive things for US bond markets. 1. It sent the Euro to new 9 year lows. For the most part, lower Euros correlate with lower bond yields. 2. It suggested that the Swiss National Bank (SNB) firmly believes that the ECB is going to pull the trigger on some serious iteration of QE next week. Reason being, if the SNB had stuck to its policy of capping the Franc’s value vs…(read more)

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