MBS Day Ahead: Bonds Defend And Hope to Extend

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Posted To: MBS Commentary

For nearly a week, 10yr Treasury yields had been treating 3.18% as a floor (3.178% was the lowest close over the past 4 days. That arguably changed yesterday , with the entire session trading under 3.18% despite a late day sell-off that almost spoiled the party. With overnight strength, bonds are now in a position to confirm the technical breakout. That would be a small victory. 3.18% is a short-term, intermediate pivot point at best. What we'd really like to see is a confirmed break below the most serious floor of the past 3 weeks at 3.13%. Realistically, that would require a move below 3.11% (which would break yesterday's intraday lows–also the intraday highs from September 25th). The following chart splits the difference at 3.12%, but let's not split hairs. The point is there's…(read more)

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