MBS Day Ahead: Bonds Battle Back With Trade Headline Help

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Posted To: MBS Commentary

Yesterday saw bonds jump up to the highest yields in more than 2 weeks. Culprits were diverse, including stronger overseas econ data and new trading positions being added for December's first trading day. Domestic econ data helped stem the losses with ISM Manufacturing coming in weaker than expected. From a technical standpoint, the move was disconcerting as it looked to be confirming a bounce at 1.74% or the lower end of the consolidation pattern seen in the chart below. The implication was/is a move back to the higher end of the recent range (or the upper line of the consolidation pattern). Overnight trade headlines reminded us that we're only ever one overnight trade headline away from a shift in the apparent momentum. Granted, markets are increasingly desensitized to trade headlines…(read more)

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