MBS Day Ahead: Any Weakness After NFP Means a Showdown With 3-Year Highs


Posted To: MBS Commentary

Bonds are right on the edge of the relative abyss. If 10yr yields break much higher today, we'll be operating in territory not seen since early 2014. Frustratingly, if bond yields break lower, we'll be right back in the position of wondering if they'll break higher again after next week's Fed announcement. So even though some short term momentum metrics suggest we're technically " ready " for a bounce (i.e. we've strung together enough weak days that short-term momentum is "oversold"), it's hard to make a case for a meaningful bounce until we see what the Fed has to say next week. As for today's NFP data, it's not likely to have a material impact on next week's Fed meeting. It could come in significantly weaker and still not derail…(read more)

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