MBS Day Ahead: Too Early To Cue The Holiday Trading Vibes?

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Posted To: MBS Commentary

When bonds have been in a relatively strong trend for better or worse heading into the 3rd week of December, we tend to see a consolidation or a continuation (rarely a reversal). That's good news for bonds, considering a consolidation or continuation would both be just fine with us at current levels. The only major risk has been–and continues to be–that stocks manage to break their rusty chains and run back up into the range they broke below last week. The lower boundary of that range lines up well with an inflection point in 10yr yields as well (2.92%). Here's what the wider angle looks like. Basically, this was the "floor" for stocks during the past several months of volatility. 2.92% is far enough away from current 10yr yield levels (and 2620 far enough from current equities…(read more)

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