MBS Day Ahead: Every Green Day is Another Chance

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Posted To: MBS Commentary

Any time rates have been trending decidedly higher (as they have been since mid-April), every day of gains has the potential to become the turning point in the trend. By default, we have a certain amount of improvement we need to see before concluding the negative trend is over, but two days with the same amount of improvement can mean very different things depending on when they show up. For instance, a green day in the early stages of a negative trend has less of a chance of being a meaningful turning point. The same goes for small improvements that follow multiple successive days of selling. Such small days tend to be mere "corrections" to the prevailing momentum. So far, today is taking the shape of one of those incidental corrections, but it could turn out to be something more…(read more)

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