MBS RECAP: Bonds Start Strong But Fade Thanks to Stocks/Dollar

Posted To: MBS Commentary

Today was destined to be a lower-volume session simply because it's the Monday after Good Friday. That means many US market participants are still out of the office and the entirety of European markets is closed for Easter (observed as a Monday holiday in the EU). Low volume doesn't guarantee volatility, but it facilitates it. Think about any group of buyers and sellers where supply and demand set the price. Let's say we all buy and sell oranges. If there are 50 of us with 50 oranges each, we'll have a pretty good idea of what the going rate should be for an orange. Now, if there are 3 of us with 3 oranges each, if 2 of us need to buy and one of us needs to sell, the price of an orange would go up much faster. In other words, low volume and light liquidity mean that every dollar…(read more)

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Source: Mortgage News Daily

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