Saturday , 23 January 2021

MBS RECAP: Bonds Take Some Solace From Downbeat Draghi

By Matthew Graham

Posted To: MBS Commentary

European Central Bank President Mario Draghi delivered his customary press conference following this morning’s policy announcement. Markets expected him to be bond friendly, but the realities of his words suggested those expectations could have been even bigger . Draghi was flat-out pessimistic on the economy and inflation. Most strikingly , he wasn’t skipping a beat in delivering this message. It was a confident and matter-of-fact presentation of bearish economic realities. The ECB’s expectation is that those realities will take a toll on economic data in the short term as well as inflation. Bonds love crappy econ data and lackluster inflation. They also loved the implication that the ECB–like the Fed–is ready and willing to adjust its policy normalization plans in order to offset…(read more)

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