MBS RECAP: Bonds Live to Die Another Day

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Posted To: MBS Commentary

Friday was tense for the bond market, with selling pressure that was just big enough to cause concern about a bigger correction, and buying support that was consistent enough to suggest we still had a chance. Today's trading quickly proved it was buyers who had better control of the momentum–or did it? Today's trading certainly proved that yields were willing to go back down , but that may not have as much to do with buying demand as it does with the structure of the market and the exceptionally low volume. Simply put, it made strong, logical sense to be short bonds on Friday. After all, yields had rejected a post-Fed rally by failing to close below 2.02% for 2 straight days despite making it as low as 2.972% on Thursday. Friday quickly brought 10yr Treasuries back to the 2.06% technical…(read more)

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