MBS Day Ahead: Different Ways to Look at Room to Run in Bond Rally

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Posted To: MBS Commentary

The past few days of consolidation had a bullish tilt Meaning: when yields broke out of a narrowing pattern, it was slightly more likely to be a positive break So far, so good, but room to run will eventually run out In today's chart, you'll easily be able to see the rally that began the year for bond markets. That rally lasted every bit of 6 weeks and covered quite a bit of ground. The current rally trend is already almost 3 weeks old and has been covering ground at a similar pace. Given that the January rally arguably had more going for it in terms of motivation, we may well wonder what kind of staying power the current trend will have. In other words, the trend is good, until it turns bad. In judging when good trends go bad, we can look at simple trendlines over varying amounts of…(read more)

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