MBS Day Ahead: Downtrend Taking Shape; Focusing on Stocks and Technicals

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Posted To: MBS Commentary

As the new year continues, a common new year's theme is in full effect: the stock/bond correlation. Stocks and bonds frequently move together over short time frames (but not over super long time frames). The beginning of any given year tends to see more of this correlated movement, and 2017 has been no exception. The current trading day begins with bond yields having moved nicely lower with stocks overnight. In the bigger picture, a clear downtrend is shaping up for 10yr yields (teal lines below). We can still keep an eye on the same technicals we've been following (2.34 and 2.29 are the nearest) to get a read on how the trend is progressing. Yesterday saw another test of 2.34 but bonds bounced higher. Now we're right back to 2.34 to start today's session. Today brings the week's…(read more)

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