MBS Day Ahead: Bonds Begin Week With Some Optimism

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Posted To: MBS Commentary

As of last Thursday, it didn't look like traders were much interested in hearing arguments in favor of bonds. Then, an unexpectedly healthy little rally on Friday kept hope alive going into the 3-day weekend. Now this morning, the week begins with yields a few bps lower still. 10yr yields begin the week below the middle Bollinger Band (a 21-day moving average that serves as a sort of dividing line between a majority of buying and selling sprees. As can be seen in the most recent dip below (middle yellow line), sometimes the buying sprees are short-lived when we're in the midst of a longer-term uptrend in rates. Momentum technicals (the stochastic oscillators at the bottom of the chart) are also in pretty good shape , with a potential bounce shaping up in shorter-term momentum. The message…(read more)

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