MBS Day Ahead: Jackson Hole Day – Here’s What That Means

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Posted To: MBS Commentary

In the day just passed, bond markets weakened in the overnight session and then held mostly steady during the domestic hours. The most notable attempt to change that was seen after the exceptionally weak Markit PMI data which showed the weakest manufacturing and composite numbers since 2009. Bonds don't have a rich history of reacting to Markit PMIs (we've always preferred ISM numbers in the US), but that has been changing in recent years. The volume and momentum behind yesterday's reaction confirmed that (quick, high-volume, logical rally). But the buyers only took yields so far before we found ourselves right back where we started. Ultimately, 1.62% support held (our nearest major ceiling), despite a case to be made for an upwardly-sloped trend channel seen in the chart below…(read more)

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