MBS Day Ahead: Bond Market Trend About as Weak as it Gets

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Posted To: MBS Commentary

Today's chart has a piece of technical analysis I haven't posted in quite a while, but it's fairly easy to understand and fairly useful. The tech in question is the Average Directional Index ( ADX ), and it simply measures the strength of any given trend. At present, we already know that bond markets have been largely contained in a fairly narrow, sideways range after bouncing back from all-time lows in the wake of the Brexit news. The ADX overlay helps us visualize just how weak the trend has been relative to past examples. In other words, if we were to ask "how sideways are we?" ADX gives us an exact number answer (as opposed to qualitatively observing "hey… that chart looks really sideways"). We'll probably continue keeping an eye on this, watching for…(read more)

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