MBS Week Ahead: Action-Packed, With Month-End and NFP

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Posted To: MBS Commentary

As bond markets continued to grind sideways, seemingly unable to (or "not yet willing?") to break below some key technical levels (see chart), this week will provide enough data to tip the scales in one direction or the other. In fact, it's not just economic data that will help decide our near term fate, but also a concept that we've been discussing more and more lately: tradeflows. I use the term " tradeflows " somewhat loosely to refer to the broader phenomenon of market participants opening and closing long or short positions. For example, an insurance fund or large asset management firm might have opened a new "short position" as rates began rising. When rates break through a certain target and then fall back below that target, the account with the…(read more)

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