MBS Day Ahead: Consolidation Breakout Sets Up Important Test For Bonds

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Posted To: MBS Commentary

Yesterday was boring and uneventful. Bonds seemed to be trying everything in their power to remain range-bound and avoid breaking out of the consolidation pattern we'd been tracking. By contrast, today's bond market is unrecognizable –seemingly determined to break forcefully outside the consolidation pattern. There were significant gains overnight. As noted in this morning's first update on MBS Live, these arrived hand-in-hand with heavy selling in stocks. The goal/challenge from here will be to convincingly break below the pivot point that we've been eyeing ever since we broke above coming in the other direction. 3.13% in 10yr yields is the line in the sand standing between us and more livable yields. Note: the chart above was snapped a few minutes before the last leg of the…(read more)

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