Posted To: MBS Commentary

Up until last Friday, bonds had improved decisively for 5 consecutive days. It's fairly rare to see these sorts of winning streaks last more than 5 days, and this time was no exception. In fact, traders went out of their way to sell bonds aggressively last Friday. It ultimately matched August 11th as the worst day of since early June. Moreover, it did so with no provocation from the stock market. Just a day earlier, stocks were unequivocally the source of inspiration for that 5th day of bond market gains. Why would bonds listen to stock market weakness on Thursday but not Friday? The easy (and incorrect) answer is that Thursday was just a coincidence and the two have no bearing on each other. Don't get me wrong. I'll spend just as much time debunking stock/bond correlation as I…(read more)

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Source: Mortgage News Daily