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MBS Day Ahead: Presidential Debate Could Offer Hints at Bonds' Election Game Plan

Posted To: MBS Commentary

The absence of volatility in the bond market cannot be overemphasized at the moment, or during most any moment since mid August. Rather than drift toward a more committed stance–as they often do when a sideways trend drags on for too long–bonds have instead doubled down on the paralysis in each of the past 3 weeks. In other words, the range has grown narrower and narrower with this week being contained by less than 3bps in 10yr yields (.648% -.674%). That increasing level of consolidation is coming to a head today or tomorrow. In other words, yields will no longer be able to remain inside the yellow lines in the following chart. It remains to be seen whether a breakout of this mini-consolidation will mean anything other than a simple return to the previous (and still excruciatingly narrow…(read more)

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