MBS Week Ahead: Bonds Staging at 2019’s Most Important Crossroads

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Posted To: MBS Commentary

1.90% has been the most important, most dangerous ceiling for 10yr Treasury yields ever since a nasty selling spree stalled out there exactly 2 months ago. We'd been able to avoid an outright confrontation until last week's trade deal optimism and bond supply concerns prompted a surge all the way up to 1.973%. When yields are approaching a bigger-picture technical level such as 1.90%, I like to look for another level above that to allow some room for overrun. This is useful in cases where the technical level is treated as a cue for buyers to jump back into the market (because they will often wait until the most obvious technical level is actually broken). In the current case, 1.94% made the most sense due to its role as a floor back in early July. Although we saw slightly higher yields…(read more)

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