MBS Day Ahead: Still Consolidating, But Now More Enthusiastically

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Posted To: MBS Commentary

In the day just passed, the bond market improved by an amount that would be considered fairly strong compared to the previous session's closing levels. But when examined from intraday peak to trough in 10yr yields, the move was far more impressive–the biggest intraday gainer since August 23rd (Fed's Jackson Hole day). The culprit was a staggeringly weak ISM Manufacturing report (weakest since 2009), which hit a bond market that had moved somewhat abruptly higher in yield overnight. The resulting 180° was the most logical result. In the day ahead, the bond market will decide what yesterday means in the context of the current trend. Until yesterday morning, the prevailing trend had been sideways and narrower (aka, a consolidation) for more than a week. In fact, we could look all…(read more)

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