MBS RECAP: Strong Showing For Bonds

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Posted To: MBS Commentary

I don't think candlestick patterns can predict the future, but a few of them offer quick and easy ways to convey a certain theme in the market. One of the clearest patterns is the "engulfing pattern." This happens when today's candlestick completely engulfs yesterdays's (in the sense that it has opening and closing levels that fall outside the range set by the previous day. In other words, prices/yields/whatever just moved way more than they did in the previous session, so the direction of the move should carry a bit more weight in terms of speaking to underlying momentum. With all of the above in mind, today's 10yr yield candlestick easily engulfed the last 2. There's an outside chance that today's strength simply represents a glut of "new month"…(read more)

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