MBS Day Ahead: Beware Short-Term Bounce Potential But Don’t Freak Out Until It’s Time

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Posted To: MBS Commentary

Bonds are beginning the day in weaker territory for one of several reasons (MBS Live members can read about them in greater detail HERE ). The weakness comes at a bad time with respect to the progress made in the past few weeks. We're not talking about anything apocalyptic, but we do need to be on the lookout for a short-term bounce. It's arguably already taking shape. From a technical standpoint, the bounce can be viewed as an inability of 10yr yields to break below 2.30+ after having stalled out there on both Tuesday and Wednesday. That neighborhood (2.305-2.315%) had been one of our most widely-followed technical levels earlier in 2017, and for a time, was the lower boundary from the weaker 1st quarter. After that, it played more of a pivot point role. Some technical overlays (calculations…(read more)

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