MBS RECAP: Bonds Finally Agree to Rally After Much Haggling

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Posted To: MBS Commentary

For a while, it looked like today would turn out to be one of those "dud" Fed days where actual market movement woefully undershoots potential market movement. The prevailing 10yr yield range of 3.06-3.09 was intact to an eerie and frustrating extent for a full hour after the initial Fed announcement (and with a big bounce on both sides to emphasize the point!). Then, in his post-announcement press conference, Powell said something that he probably didn't think twice about, but that markets were more than willing to latch on to. In not so many words, he said the Fed doesn't see inflation surprising to the upside. More simply put, inflation should either remain in line with expectations or lower. Bonds like low inflation, so bonds rallied. We can also assume we're getting...(read more)

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