MBS Day Ahead: Back in The Range, But Yield Curve Could Protest

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Posted To: MBS Commentary

10yr yields attempted to break above their prevailing range yesterday. As we discussed in the Day Ahead, it takes more than just an intraday move above a ceiling in order to confirm such a break is taking place. Ultimately, yesterday's theme evolved into a resounding defense of the 2.88+ yield ceiling. More simply put: yields briefly traded near 2.90% and then bounced lower with solid demand underlying the move. As the top section of the following chart shows, today has seen yields hold right in the middle of the prevailing range. If they remain fairly close to current levels, today will end up being an uneventful "punt" to next week. Bonds will effectively be saying they're putting off bigger decisions for now. In fact, they'd be putting off the comparatively small decision…(read more)

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