MBS RECAP: Bonds Squeezed to Best Levels in Months Ahead of Fed


Posted To: MBS Commentary

Uncertainty has reigned supreme for much of 2019 as traders weigh shifting economic data, potential data inconsistencies (due the shutdown), trade policy, and Brexit-driven uncertainty against central banks' collective response. Everyone seems to be pretty confident that the Fed's response will include some new news on the topic of its balance sheet at next week's meeting. That uncertainty combined with the prospects for the friendly Fed news took bonds to their best levels in months as of Tuesday. From there, it looked like we were circling the wagons in preparation for next week's Fed, and that bonds were respecting a resistance boundary around 2.60%, or even 2.612% based on yesterday's domestic session lows. Traders set stop loss levels in line with 2.612%, but other…(read more)

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