MBS Day Ahead: Bonds on Edge as Tax Vote Could Come At Any time


Posted To: MBS Commentary

Bonds are beginning the day in roughly unchanged territory, but that's not a good thing as far as the bigger picture is concerned. "Unchanged territory" means that yields are right on the edge of a very long-term range. In fact, with the exception of failed breakout attempt in late October, 10yr yields have held under a ceiling of 2.42% since March! It's not just a ceiling that saw an isolated bounce either. The 2.4-2.42 zone has been attacked on multiple occasions–each time acting as support for an impressively resilient bond market in 2017. Now with a tax bill vote looming in the Senate, we could be looking at "the thing" that finally challenges that ceiling (and beats it). At the very least, it seems that bonds are staging for this eventuality. If we do see a…(read more)

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