MBS Day Ahead: Fight Rages on to Confirm Ceiling, Waiting on Auction and Fed

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Posted To: MBS Commentary

Bond yields have been trending steadily higher even after the initial rout that followed the election. Based on several technical measurements, upward momentum has faded , and we've seen hints that bonds are trying to carve out a ceiling around 10yr yield levels of 2.50%. To be sure, the case could be more compelling. After all, just yesterday, yields hit 2.528 in the overnight session, before rallying to close at 2.479%. And it's also important to keep in mind that technical indicators will give the appearance of positive shifts simply if exceptionally weak movement subsides (i.e. a positive shift in technicals sometimes simply means that markets are "less bad" than they were before). All that to say that the following technicals should be taken with a grain of salt , because…(read more)

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