MBS Day Ahead: Consolidating Into Fed Minutes, But Not Because They Guarantee a Breakout

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Posted To: MBS Commentary

In the day just passed, a modest uptrend in yields was "defeated" from a technical standpoint. Yields broke below a trend-line marking "higher lows" that began last Thursday afternoon and spent the rest of the day moving mostly sideways at stronger levels. Stocks were weaker but that didn't necessarily have a bearing on bond market strength. If there was cause for concern, it's that bonds didn't rally below the lows from August 16th (which in turn represented higher lows versus the previous day). In the day ahead, bonds will likely continue feeling out a consolidative range heading into this afternoon's FOMC Minutes. Keep in mind that the Minutes do not represent a new policy decision from the Fed, simply a more detailed account of the meeting that occurred…(read more)

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