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MBS RECAP: Shutdown Deal Hurts Bonds, But Mostly Helped Stocks

February 12, 2019
by admin

It’s hard to say exactly where stocks and bonds would be today absent the news from yesterday night regarding a possible shutdown deal. Both sides of the market were already in the process of bouncing as of last Friday–with yesterday’s closing levels acting to extend that move.

The shutdown news didn’t hut until after the close. It definitely had an impact, but it’s impossible to say that trading levels would be very different without it. In fact, bonds lost ground at a slower pace today compared to yesterday, so at the very least, we can conclude that bonds aren’t hung up about it. The last remaining unknown with respect to this shutdown saga is what, if any, reaction we’ll see when the deal is finalized. There too, it’s safe to say it’s not going to be a defining moment for the bond market, even if it’s worth another token reaction.

The more visible impact was in the stock market today, but only when we’re looking at stocks closely enough. The more we zoom out, the more everything blurs together as one, prolonged uptrend leading back from late-December lows. The same exercise in bonds leaves us looking at the same old consolidation we’ve been tracking with absolutely no threat presented by shutdown news.

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