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MBS Day Ahead: Bonds' Already Hitting The Floor of The New Trend

Posted To: MBS Commentary

Trend channels in financial markets are some of the most basic forms of analysis. They consist of lines drawn along the highs and lows of a charted security. When parallel lines can be drawn that connect more than a few highs and lows, you have a trend channel! It's even acceptable for the security to break outside the lines here and there if they are still capturing a majority of the bounces. The goal of a trend channel is right in the name: we're trying to capture a general trend that speaks to the pace of improvement or deterioration in any given security. When it came to bonds, 10yr Treasury yields were in a clear trend channel pointing toward gently higher yields for several months recently. They faked a breakout in early June only to return to the previous range and ultimately…(read more)

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