Today, ECB comments led bond yields to spike around the world. The comments stemmed from an unnamed official at the European Central Bank. As a result, global bond yields rose. This includes mortgage-backed securities.
ECB Comments Led Bond Yields to Spike
Earlier today, a European Central Bank official official said that a “consensus was being formed to gradually taper the ECB’s bond buying program when they decide that it’s time to conclude it”. Thus, the ECB comments led bond yields to spike globally.
Overall, the European Central Bank’s plan resembles one executed by the United States Federal Reserve. When it was time, the Federal Reserve ended its bond buying program.
It seems clear that the bond purchase program will end. Currently, The European Central Bank bond purchase program expires in March 2017. At the last meeting in September 2016, some investors felt disappointed.
Many investors wished that the European Central Bank extended their bond purchase program after the ECB comments spiked bond yields. Now, investors eagerly await the next European Central Bank meeting. That meeting is scheduled to take place on October 20th, 2016.
Investors Reduce Future Expectations
Since the ECB comments led bond yields to rise, investors plan to reduce their future expectations. Conclusively, the added demand for bonds from central banks, such as the European Central Bank, helped to push down bond yields. This influences investors to reduce their expectations for additional stimulus from the European Central Bank. Today’s events reflected negatively for both stocks and bonds.
After the ECB comments led bond yields to rise, the market faces continuous fluctuation. Want to see what happens next? Never miss an update with MBSQuoteline. To receive by-the-minute updates on mortgage-backed securities, try our platform free for 14 days.
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