MBS RECAP: Battle of Fed Speakers Results in Firmer Rate Hike Hints

I was writing reprice alerts and chatting with the MBS Live community during the time that I'd normally be writing the Mid-Day commentary.  By the time I wrote it, everything interesting that was going to happen today had already happened!  (This happens from time to time.)  As such, your best bet for a recap of the entire day is to get the details from the Mid-Day commentary (HERE). 

For those who don't click links, here's another run-down:

Fed speakers were the most prevalent market movers today as the Jackson Hole symposium continued (a big party in the mountains where people who make important decisions about the global economy get together and talk about the global economy.  It's long been seen as a venue for Fed officials to be a bit more candid than they otherwise would be, thus providing better clues about upcoming policy changes). 

This year's Jackson Hole confab couldn't come at a more relevant time in that regard.  The long and the short of this one is that earlier Fed speakers generally swayed markets farther away from a September rate hike while Fed Vice Chair Fischer brought the consensus right back.  All Fischer had to do was start talking VERY candidly about how the Fed wouldn't raise rates again very soon after the first bump.  With that, markets assumed it was his way of saying "hey guys... it's coming, yeah...  BUT!  It won't be too bad, and here's why!"  From there, he did leave the door open for something crazy to happen in the next 2 weeks that would sway the Fed's decision.

Caveat: Fischer is only one Fed member, but he's also the Vice Chair, and well-respected. 

Either way, markets bought it.  Shorter term rates (more sensitive to Fed expectations) lost the most ground while longer term rates managed to hold steady at unchanged levels after the Fischer-inspired sell-off.  With his "2 weeks" comment, Fischer made every single economic report on the near term horizon much more important than it otherwise would be.  Next week should be fun.