MBS Week Ahead: October Begins With a Reminder About The Trend


Posted To: MBS Commentary

The current trend in bond markets is not your friend. While it may sound trite, there's a reason we say "the trend is not your friend until it's your friend again." This analytical platitude isn't just meaningless common sense. It's the most basic and one of the most reliable ways to integrate technical analysis with client communications and/or lock strategy. In other words, when bonds are clearly in a downtrend (as they were from July through early Sept), the trend was our friend (until it wasn't our friend anymore). As soon as yields broke above that upper trendline in early Sept, the trend became unfriendly. After the first few instances of higher highs and higher lows, we had a new, unfriendly uptrend in rates–one that's been intact ever since. As soon…(read more)

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