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MBS Day Ahead: Bond Bears Asking Yet Again, Is Now a Good Time For a Breakout?

Posted To: MBS Commentary

It was fun and easy to get caught up in (or spoiled by) the recent ultra-narrow range in the bond market. The boundaries of that range were .62 and .72. It lasted for roughly 2 months with one brief exception for a failed breakout attempt, which is nothing short of impressive for a range that narrow. The broader range remained intact, with the aforementioned breakout attempt stopping at 0.79% in late August. That late August sell-off made 0.79% an important level because it reinforced previous behavior from early April and mid-June. Simply put, there is no higher 10yr yield that's seen more bounces since bonds first settled into their post-covid range. That was true even before the late-August bounce, actually. So perhaps that bounce was simply a way for bond bears to ask if it was time…(read more)

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