MBS Day Ahead: Should The Last Trend Get a Do-Over?

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Posted To: MBS Commentary

Bonds gave us quite a scare last week as key technical ceilings gave way. High volume and concrete fundamental justification added validity to the move. Combine that with the massive size and old age of the 2019 rally and there was more than just a small reason to be concerned. To be very clear, there are still reasons to be concerned about a potential big-picture shift that may be in the works, but we can at least entertain the possibility that such a shift has yet to be confirmed. I keep going back to 2011 as the best example of similar behavior in the bond market. For several weeks now, it has been the precedent that lets us know bonds could rally even more, or undergo only a mild correction before embarking on another rally trend. If we examine 2019 vs 2011 with a long-term modified moving…(read more)

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