Posted To: MBS Commentary

Bonds finally broke out of one of their prevailing ranges yesterday as Wuhan virus fears reached a new level. Some may roll their eyes at this sort of thing serving as the source of so much market movement, but it is what it is. SARS pushed Hong Kong into a recession in 2003 and accounted for a 30bp drop in US 10yr yields. That was a type of coronavirus. Wuhan is a new strain of coronavirus. People and markets are all doing the math. Commerce is unavoidably being affected and markets are merely accounting for that. Health authorities are working on a vaccine, and beyond that, at some point (presumably) the spread of the disease will cease to be exponential. If the vaccine is effective and incidence declines, much of the recent rally momentum could be erased because a portion of it relies on…(read more)

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Source: Mortgage News Daily