MBS Day Ahead: With Key Floor Broken, Bonds Defend New Ceiling

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Posted To: MBS Commentary

10yr yields had 3 big bounces at 2.80% in March, making it the only obvious candidate for the lower boundary of the recently sideways range. It was finally broken on Tuesday, leading to question: what now? While it remains to be seen whether the breakout is partly made of artificial ingredients (things like month-end bond buying and a one-time bout of short-covering–both things that could be cleared up when we see how bonds are trading next week), all we know today is that it's still intact. What, then, are the levels that would call the breakout into question? Really, there's only one to watch today , and it's not exactly 2.80%. That's because after breaking below 2.80%, yields rose to test a technical ceiling, but it happened to be a bit lower at 2.79%. At times like this…(read more)

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