MBS Week Ahead: How Much of a Cushion Does The Long Term Rally Have?


Posted To: MBS Commentary

Seeing as how March would end up being the worst month for bond markets since the taper tantrum if the current pace of selling continues, and whereas key events are coming up this week that could definitely push us in either direction, let's take a moment to consider just how bad things could get before the bigger picture became anything other than 'strong like bull.' This is actually pretty basic, thanks to the linear long-term bull market in bonds. This allows us to simply draw a few trendlines on the series of "lower highs" in 10yr yields. For good measure, we can also pick out a nearby pivot point (horizontal line) that has served a similar purpose to the recently-broken 1.84%. I'll use 2.05%, but please keep in mind any time we zoom the chart out this much, any…(read more)

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