MBS Day Ahead: Two Trends Suggest Risk of Resistance Bounce For Rates

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Posted To: MBS Commentary

With bonds being flat to slightly weaker yesterday and now noticeably weaker overnight, we may be looking at our first real resistance bounce (aka "floor") in over a week. Such a bounce makes a case for two different trends that may be emerging. Both are highlighted in the following chart. The yellow lines represent a potential downtrend. After hitting long-term highs earlier this month, there's certainly a chance such a trend could continue a while longer if economic data disappoints this week. The teal lines represent a potential consolidation trend. In one sense, this could speak to a bit of indecision ahead of mid-term elections . But this trend would also leave enough room to be a quintessential circling of the wagons ahead of Thanksgiving weekend (it's not uncommon to…(read more)

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