It was a volatile day yesterday in the MBS markets as
we rallied in the morning before selling off in the
afternoon. The morning rally was the result of investors
pulling money out of the equity market and bonds were
the benefactor, however those gains were erased by an
afternoon sell off. This was believed to be caused by an
article released that suggested President Obama may
be leaning towards selecting Donald Kohn as the next
Federal Reserve Chairman. Donald Kohn is perceived
to be more hawkish and therefore more likely to scale
back the Fed’s bond buying program than the
perceived frontrunner Janet Yellen. No immediate
decision is expected by Mr. Obama but investors will be
paying close attention to any indication about what
direction he may be leaning.
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