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MBS Day Ahead: Bonds Remain Under Pressure Ahead of Auctions and Fed Minutes

Posted To: MBS Commentary

Tuesday was going poorly for bonds until Trump Tweets (instructing his representatives to stop negotiating a stimulus bill) sent markets into a tailspin. Stocks tanked and bonds rallied significantly, thus throwing a bit of a wrench into the prevailing mechanics of cut and dried negative momentum. In other words, bonds had recently suffered 2 negative technical breakouts (10yr yields moving above important ceilings). The first was a small scale version that merely resolved a narrow consolidation last week (yellow lines in the chart below). The second breakout hit hard at the beginning of the current week, easily breaking the 0.72% ceiling that had been intact since August. The reversal/clarification of the tweets was problematic due to its timing. Bonds had JUST broken a key technical ceiling…(read more)

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