MBS Week Ahead: Unlucky Number 7

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Posted To: MBS Commentary

In the week just passed, the bond market rallied strongly. Weaker economic data–especially the two ISM reports–led the way, ensuring the middle 3 days of the week did most of the rally's heavy lifting. Momentum suddenly flattened out on Friday after an interestingly mixed jobs report, but yields nonetheless managed to move lower over the course of domestic trading hours. Overall, the gains went a long way toward completely erasing the harsh, corrective sell-off seen in early September. In the week ahead bond traders will ask themselves if it's time to push rates a bit higher again purely for technical and tactical reasons. On the technical side of the equation, last Friday capped the 2nd instance of a 7-day rally in rates. While there's no hard and fast rule, consecutive days…(read more)

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