MBS RECAP: Just When You Thought The Ceiling Was a Ceiling


Posted To: MBS Commentary

Undoubtedly, yesterday's bond trading sent a clear message that a technical ceiling near 2.88% was met with strong defense from traders who bought bonds and pushed yields back down into the recent range. Color all of us shocked, then, that today saw yields promptly rise right back up to that ceiling! Perhaps even more frustrating was the fact that it would take no small miracle to make solid sense of the move from a technical or fundamental standpoint. Still, I will try… One of the two explanations I offered for yesterday's strong buying was that it could have been due to traders cashing out short positions. More simply put, traders who bet on rising rates in the short term (at the last bounce at the bottom of the range last week) could have booked their profits and closed out short…(read more)

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