Tuesday, 20 August, 2019


MBS Day Ahead: Here’s How ‘Priced-In’ Rate Cuts Are

Posted To: MBS Commentary

In the day just passed, bonds did an admirable job shaking off the ill effects of a significantly stronger Philadelphia Fed Manufacturing Business Outlook Survey (aka “Philly Fed”). This report is a solid and fairly consistent market mover. It beat its forecast by the largest amount since 2009. Those facts alone are pretty scary for bonds, but there were nuances that helped mitigate the damage (we discussed them in detail yesterday in the Huddle and the Recap ). Chief among these was a speech by San Fran Fed Pres. Williams which markets took as a potential indication of a 50bp rate cut in July. He’s since given an interview saying that wasn’t his intention. In the day ahead, nothing really matters because yesterday–and indeed the past several months in general–have shown…(read more)

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