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MBS Day Ahead: New Month, New Trend?

Posted To: MBS Commentary

While it's definitely not a hard and fast rule, we often see a clear bias toward strength or weakness during any given month in the bond market. July was unequivocally stronger , lining up almost perfectly with the most recent down-trend in yields (teal lines in the chart). August was decidedly weaker , with yields bottoming out on the 4th before embarking on the up-trend we're currently tracking (yellow lines). After a bounce at a ceiling of .79% on Friday, bonds have rallied nicely over the past 2 trading days. As of this morning, they're trading in a narrow range very close to the lower boundary of the prevailing uptrend. Is this a sign that we're about to see another monthly shift in broad, underlying momentum? More simply put, if July's trading could easily be placed…(read more)

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