MBS Day Ahead: Another Potential Head-Fake, Or Turning Point

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Posted To: MBS Commentary

Yet again, bond markets have managed to string together 4 days doing something other than selling off abjectly. Without a firmer push toward lower yields, these strings of days "without pushing toward higher yields" are the first possible signs of a positive reversal. They're also the least reliable signs of reversal, as seen in mid-September. As the chart suggests, we've been focusing more on technical indicators like MACD, which give us an easier way to see deeper commitment in a potential reversal. Simply put, as soon as the bars start moving lower, that's an early positive cue , but it's when they rapidly approach or cross the zero line that we can more confidently bank on a bit more bullishness for bonds. Inspiration will have to come from something other than…(read more)

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