MBS Day Ahead: Bonds Increasingly Threatened by Momentum Shift; Powell Part 2

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Posted To: MBS Commentary

Fed Chair Powell will deliver round 2 of his congressional testimony today, this time at the House FSOC (yesterday was with the Senate Banking Committee). There's no reason to expect today's House session to be any more of a market mover than yesterday's Senate version. In fact, the 2nd day of testimony almost always tends to be ignored relative to the 1st day, though there are a few exceptions. Perhaps more interesting for bonds right now is the fact that momentum is at risk of shifting negatively in the event of any additional weakness. As seen in the following chart, yields have backed up to their middle bollinger band (a technical study with a 21-day moving average as the middle line with outer lines that are 2 standard deviations higher and lower). Breaking above the middle…(read more)

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