MBS Day Ahead: Bonds Fight For Consolation Prize: The Horizontal Range

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Posted To: MBS Commentary

After confirming a breakout from the "consolidation range" (the converging lines tracing the lower highs and higher lows over the past 3 months) yesterday, bonds move on to fight for the consolation prize–a consolidation consolation, if you will. The next type of range boundary after breaking a sloped ceiling is a simple, flat ceiling marked by recent highs and/or historically significant trading levels. In the current case, 2.52 and 2.55 have been relevant for 10yr yields. Unfortunately, we're starting the day OVER 2.55 already (this may lead to a discussion of the next ceiling at 2.64 by and by, but we'll cross that unhappy bridge if we're forced to). For now, there's a fighting chance to hold one of these ceilings, despite the fairly universally negative technical…(read more)

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