MBS RECAP: Bonds Manage to Consolidate Recent Weakness Rather Than Add to it

Today was a good test for MBS and Treasuries. It spoke volumes to the current state of play in bond markets: traders are afraid to get too short ahead of next week’s ECB Announcement (“getting short” equates to higher rates). Traders may also be afraid to get too short in general, simply because that decision is nearing Pavlovian levels of association with PAIN so far in 2014, but especially in the month of May.

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