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MBS RECAP: Best Day For Bonds Since Late June

Posted To: MBS Commentary

If there is one thematic event at the heart of the past 4 weeks, it was a series of comments from European Central Bank (ECB) President Mario Draghi back on June 27th, essentially foreshadowing a winding-down of asset purchases. In other words, markets quickly began entertaining the idea of a European taper tantrum. The taper tantrum brought important lessons though–especially for central bankers who might be a bit too eager or forceful when the time came to make a shift. There’s no material reason for the ECB to begin tapering immediately or to maintain a fast pace of reductions once it commits. The ECB can learn from the Fed’s mistakes and take a much more measured approach. Intentional or not, Draghi’s June 27th comments were a trial balloon for the market’s mood with respect…(read more)

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Source: MortgageNewsDaily

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