MBS Day Ahead: What Stock Lever? Bonds Tanking Without Any Help

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Posted To: MBS Commentary

We've been increasingly wary about a potential break of the recent consolidation/rally trend –the one that saw yields move sideways to slightly stronger from late Feb through early April. Yields tiptoed to the top of that range as of Tuesday and then fired a more forceful warning shot with a bigger breakout yesterday. Today looks set to continue the destruction of the trend with sharp losses overnight. Where might this be going? With 2.86% breaking and 2.91% already being tested, there's really only the super-long-term highs at 2.95+ remaining. To see anything higher, we have to go back more than 4 years. If that breaks, there's not much overrun until we're looking at 2011's levels in the low 3's as the supportive ceiling. But let's slow down a bit. We'll cross…(read more)

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