MBS Day Ahead: This Week’s Rally Further Stretches a Bond Market Slingshot

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Posted To: MBS Commentary

Consolidating, biding time, coiling, storing energy, etc… Over the years on MBS Live and elsewhere, you may have come into several iterations of this same concept. It occurs when trading levels (in bonds, stocks, or anything else) had been moving in one direction or the other and then settle into a sideways or consolidating range. Remember cars with manual transmissions? Remember learning how to drive them or helping others to do so? These sideways, consolidative weeks/months in financial markets are like the time between shifts for someone who is new to manual transmissions. There's more time than there needs to be where power is disengaged from the wheels. Once the driver starts letting off the clutch, there's more jerkiness than normal. The important point is that the period of…(read more)

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