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MBS Day Ahead: Is The Bond Market's Luck Running Out? We'll Know Soon

Posted To: MBS Commentary

The premise for today is remarkably simple. In fact, it really doesn't need many words by the time you see the first chart. After Powell and the Fed's framework change caused a spike in bond yields last week, we've recovered by almost perfectly identical amounts every single day. The timing has also been eerily similar. A smattering of buying shows up in the early domestic hours and a bigger rally prevails heading into the noon hour. The simple yes or no question to be answered today: will yields make it down to the target implied by the prevailing trend? If they don't, we might conclude the past few days were merely a post-Powell correction. In fact, even if we do hit .63, it wouldn't necessarily be time to celebrate. Looking at the chart above, note the resistance at the…(read more)

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