MBS Day Ahead: What Happens If Bonds Break This Ceiling? (Philosophical Discussion on Technicals)

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Posted To: MBS Commentary

This primer (and this one , and this one ) will be useful for digesting the following, if you haven't read it before. For those paying any sort of attention to trading levels in bond markets over the past few weeks, it's hard to miss the super narrow range between 2.825 and 2.885 in 10yr yields. That's been perfectly intact since June 27th, and was broken for the first time in today's overnight session. In the chart above, there are plenty of causes for concern in terms of the technical implications of recent moves: Mid-Bollinger (middle yellow line) is broken 2.885% was broken overnight short-term momentum hasn't been oversold enough (above upper blue line) to imply support longer-term momentum has plenty of room to run (empty space between current levels and oversold)…(read more)

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