MBS Week Ahead: Bonds Attempt to Defend Against Highest Yields Since Brexit

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Posted To: MBS Commentary

Bond markets sold-off fairly aggressively following Friday's strong jobs report with 10yr yields moving up nearly 10bps and Fannie 3.0s falling roughly 3/8ths of a point. This quickly put bond markets at levels that connote the upper edge of a range that began in mid-July (also the highest closing yields since before Brexit). That range was remarkably narrow at first, and very well-behaved in that yields bounced fairly predictably when they hit the ceiling or floor. These "high-repetition" range boundaries tell us more about what markets are thinking when they're broken (if they're broken). Specifically, if yields have been hitting their head on the same old ceiling multiple times in a row, we can then conclude that it "means something" when and if that ceiling…(read more)

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