MBS Day Ahead: Take This Shift Seriously

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Posted To: MBS Commentary

In some nearby parallel dimension, the letter "f" is option in today's title. We'll have to remember this little trick the next time bonds bounce so we can refer to it as a "bull shift," but I digress. The thesis is that there's serious 'shift' going down in bond markets. After months of the best rally momentum in years, the case for a correction is growing . In fact, if we were to look purely at fast stochastics (a shorter-term momentum indicator seen in the blue/red lines in the following chart), the shift has already begun. The green and teal lines represent the slow stochastic oscillator–a longer-term momentum gauge–which has yet to confirm the shift. All of the above is a complicated way of saying that bond markets have started unwinding some of…(read more)

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