Mortgage backed securities (mortgage bonds) were higher yesterday even before the Fed released their decision. That was actually expected as any time you have three or more declining days, you are almost guaranteed a correction.
However, bonds spiked higher after the Fed rate decision. Did bonds find it friendly news? Not really, it was more that stocks didn’t like what they saw and sold off, rather quickly.
Whatever direction stocks trade, almost always bonds move opposite. So, when stocks started there nearly 300 point sell off, where was that money to go? Bonds, and so they rallied.
Bonds still have some heavy hitting news coming out tomorrow and Friday, so stay tuned and see where they end up. The trend has not been "broken" yet, but may still be with the release of economic data remaining. Bonds are down again today testing their 25-day MA for the second time this week.
