MBS Week Ahead: For Bonds, Spring Break Has Been Happening All Month

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Posted To: MBS Commentary

If bond yields can manage to hold inside their recent range through the end of this week, they'll have gone an entire month with the lowest volatility seen since last November (.144% currently vs .133% in nov). And last November was the narrowest range since before the financial crisis. We typically talk about narrow, sideways ranges as setting the stage for a bigger move higher or lower. We've used terms like "storing energy" to convey the notion that these bigger moves become more likely the longer rates stay sideways. But such breakouts can take months to develop. That was the case after the last big adjustment in rates following the 2016 presidential election. The 4 months that followed were cut from the same cloth as March 2018. On a shorter time scale, we can consider…(read more)

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