MBS Day Ahead: For Bonds, Year-End is Looking Like One Big November

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Posted To: MBS Commentary

A sideways range with higher lows and lower highs… The risk of p eriodic volatility regardless of economic data's suggestion… A certain portion of traders making certain trades simply because they have to hold certain positions through a certain date… All of the above could be said of the November bond market environment most years. This year was no exception. Treasury yields formed a nearly perfect triangle heading into the end of the month. But to whatever extent yields continue finding support at successively lower ceilings (the past 3 days have each seen "lower highs" in terms of intraday 10yr yields), December is shaping up to be very much like November –just with more elbow room. The following chart shows this (potential) phenomenon. The initial uptrend line (lower…(read more)

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