The MBS market has pretty much spent the last three days milling around and waiting for a major economic data release, and everyone was expecting to see a bit more in the way of movement this morning after initial unemployment claims dropped 9k to a seasonally adjusted 315k, the lowest reading since November 2013. Retails sales also picked up by .3%, slightly higher than analysts were anticipating, and most of the time, when such positive data is released, bonds experience a selloff. In this instance, MBS experienced a very slight drop just after the market opened but held their ground, setting us up for another day of minimal activity. Enter Ukraine. The situation has been going for a few weeks now, so the “buzz” had generally faded, but just after 11am EST, Secretary of State John Kerry stated that if Moscow does not accept a diplomatic compromise prior to Crimea’s referendum on breaking away from the rest of Ukraine, the US will take “punitive measures” as early as next week (read: military force). It’s becoming very clear that this conflict is escalating, and the markets, in turn, experienced a mass flight to safety. Geopolitical concerns far outweighed the morning’s domestic economic data releases, and MBS experienced their best day in two months to gain an average of nearly 40bps over the course of the afternoon. So far we haven’t seen any pushback on the rally, and given that there are no tier 1 data releases scheduled for tomorrow, Ukraine is likely to continuing driving market movement. Ceci Babcock Position Trader Opes Advisors, Inc.
Posted on: Fri, 14 Mar 2014 02:31:02 +0000
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