Posted To: MBS Commentary

2 weeks ago, as rates plummeted toward the lowest levels in more than 3 years, I began to point out a very obvious caveat to the gains. Because coronavirus fears were driving the move, it was only fair to expect a noticeable bounce toward higher rates when coronavirus fears began to ebb. This is not groundbreaking or deeply insightful analysis by any means. Indeed, it would be like concluding that if watering a plant makes it grow, that not watering a plant might make it grow less or stop growing altogether. But there are nuances both to the analogy and to real life in the bond market. Finance TV personalities often like to quip that "bonds are smarter than stocks." What they're getting at is the fact that bonds tend to take the big picture into consideration in a more rational…(read more)

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Source: Mortgage News Daily